Alternative mobile payments show promise as NFC awaits takeoff: ABI

By Dan Butcher

December 10, 2008

Beware on text-message scams

While the United States market waits for the mass-adoption of contactless mobile payments, other existing technologies can step in to fill the void.

Once Near Field Communication, or NFC, was the leading contender among technologies that could enable mobile payments. But NFC has developed more slowly than anticipated and will not offer viable large-scale mobile payment solutions for at least six years, according to ABI Research.

In the mean time three existing technologies -- SMS, the mobile Internet and downloadable mobile applications -- have the potential to deliver what NFC -- so far -- cannot, according to the mobile research firm.

About half of all purchases made by consumers last year were made with cash, according to ABI Research.

Consumers would in many cases prefer cashless transactions when away from home.
So, service providers worldwide have leveraged SMS, mobile Internet and downloadable mobile applications to enable mobile commerce and payments.

ParkNow mobile payments

ABI Research calculates the potential revenue in 2013 from mobile transactions using these methods at about $18 billion -- a significant opportunity for payment processors.

A new ABI Research study examines the potential for mobile payments in four key vertical markets that will drive adoption: taxis, parking, movies and Internet shopping.

While the latter is usually done using credit cards anyway, the first three are areas in which mobile payments could replace cash transactions.

Citi enables person-to-person mobile payments

The research found that Internet shopping would account for almost three quarters of this mobile commerce revenue in 2013.

A further 15 percent would come from parking, with the balance split about evenly between taxi fares and movie tickets.

Companies already seizing this mobile payment opportunity include parking provider Verrus, Indian carrier Bharti Airtel and movie theater operators in India.

Amazon and eBay -- the world's largest e-commerce merchants -- have also embraced mobile transactions with comprehensive offerings.

The new ABI Research study "Mobile Commerce and Payments" examines several emerging markets in which consumers are or will be using their mobile devices to purchase goods or services using SMS and the mobile Internet.

It highlights important players within the space, suggests who should play and who will benefit, and outlines what MNOs, merchants and financial services providers can do to take advantage of these opportunities.

It forms part of the firm's Consumer Mobility and Mobile Content Research Services.

ABI Research is a market research firm focused on the impact of emerging technologies on global consumer and business markets.

Using a blend of market intelligence, primary research and assessment from its worldwide team of industry analysts, ABI Research assists hundreds of clients each year with their strategic growth initiatives.