The "Value" of Mobile Payments

Patrick Turiano |

August 12, 2011

Interesting report released by Juniper Research last month; the value of mobile payments is estimated to reach $670 billion in the next three years. By 2015 the total value of physical and digital goods purchased via mobile payments will have increased by $430 billion.

If that’s not a statement on how popular mobile payment options, like NFC and mobile ticketing, are then we’re not sure what is.

Juniper cites the launch of NFC technologies across 20 countries in the next year and a half as a driver behind the increase. The report goes on to state that the need for financial access in developing countries is also a motivator behind the increase.

Not surprising is that the top three regions behind the uptick in the value of mobile payments are China, Western Europe and North America. By 2015 digital goods will represent a 40 percent share of the market.

We are certainly heading into exciting times, and this report is further proof that we’re on to something big that will change the manner in which we pay for our goods and services. Trials for NFC will be starting in other parts of the country within the year, New York City is rolling out a trial for contactless payments in its subway system and there are plans in place for athletes competing in the London Olympics next summer to have the ability to pay via NFC within the Athlete’s Village.

Despite this upbeat news, we still feel smaller merchants are going to take longer to adopt new technology. Let’s face it, it’s far easier for a Wal-Mart or Home Depot to swap over their technology and take on the infrastructure to enable mobile payments than it is for the small business in the middle of Anytown, USA.

Just last week, Markiyan Malko, Merchant Warehouse’s program manager and resident compliance guru, was speaking with Lisa Terry for an article she’s writing for an upcoming edition of VSR magazine. During the course of the conversation the discussion turned to adoption of the technology. Markiyan highlighted the cost of purchasing new technology (i.e. mobile payment enabled POS systems) as a source of trouble for small merchants, although he stated that incentivizing these merchants to change technology is likely to get them to move.

He also pointed out the need for a common standard for terminal manufacturers, banks and processors to follow and support NFC. Fragmentation of technology is not a friend of NFC right now, because retailers, no matter how big or small, will not support 15 different technologies.

Markiyan also pointed out the positives: mobile couponing and loyalty rewards points, for reasons that merchants and consumers will come to enjoy.