Mobile money transfers and contactless NFC will make up half the overall mobile-payments market globally in five years' time, according to a new report.
NFC (near-field communications) is a short-range wireless technology, similar to RFID and Bluetooth, which powers mobile-wallet technology.
The Mobile Payments Markets: Strategies & Forecasts 2008-2013 report from analyst house Juniper Research predicts that in the next few years, mobile payments will be driven by mobile money transfers and NFC-enabled handsets used to buy goods. The market is currently dominated by purchases of digital goods such as ringtones, music and games.
Report author Howard Wilcox said mobile payments offer "significant" service opportunities for migrant workers and people without bank accounts to make remittances, adding that existing services are growing rapidly. Mobile wallets will enable people to use their phones to pay for small-value items such as drinks and magazines, he added.
According to Juniper, money transfers and NFC will fatten the overall mobile payments market by a factor of 10 between now and 2013.
The analyst predicts the top three regions for mobile payments will be the Far East & China, Western Europe and North America — which together will account for more than 70 percent of mobile money payments on a gross transaction basis by 2013.
However, there are several hurdles to be addressed if the market is to reach tipping point, Juniper said, including NFC handset availability, workable business models and financial legislation.
Earlier this year the analyst predicted the mobile-payments market will reach tipping point over the next three to five years.
Talkback
Mobile payments have been possible for years, what's holding it back isn't handset availability or technology. Nokia launched the NFC shell for the 3220 in 2004.
No-one bought it.
What's wrong is that it's the banks which make the money from NFC and the networks which provide the subsidy.
Banks are used to making 2% per transaction and networks at least 20%.
The networks don't see why they should subsidise the hardware so that the banks can make money. The banks talk about customer loyalty and increased data traffic but the loyalty doesn't work if every network offers it and the data revenues are insignificant as we move to flat rate.
It will only work when the networks have complete end to end control of the process and can make decent money out of it. That won't happen in 3 to 5 years.