Mobile payments to be worth $180bn in five years

Mobile payments to be worth $180bn in five years

More than a quarter of mobile users will pay for goods and services using their handset by 2017 as the value of near field communication (NFC) retail payments is set to increase seven-fold.

A new report from Juniper Research claimed the value of mobile payments would hit $180bn globally by 2017, with 90% of these payments being made in North America, Western Europe and the Far East. It said 2011 was a ‘watershed’ year for mobile payments, with almost all the major handset manufacturers announcing new NFC-enabled phones and Google launching its Wallet app in the US.

However, the report’s author, Windsor Holden, warned that retailers are less convinced about the benefits of NFC payments and are unwilling to invest in infrastructure, particularly so soon after the transition to Chip and PIN. He said: ‘The full potential of the market can only be fulfilled if all ecosystem players are equally committed and mobile wallet consortia remain in place.’

Visa is using the Olympic and Paralympic Games as a showcase for mobile payments, with around 140,000 contactless payment points in the UK across chains such as McDonald’s, Greggs and Paul.

Pedro Sousa, head of the product support team at Visa, suggested that contactless cards would initially drive the shift to NFC payments.

He said: ‘They are the focus in terms of pushing the infrastructure and creating interest. A lot of people don’t know contactless cards exist yet.’

However, Visa predicts that half of its transactions will be made via a mobile phone by 2020, describing the shift ‘as a marathon and not a sprint’. The company said the payment method will become mainstream in two to three years in the US, with the UK currently lagging about a year or so behind.

Hands on in London with Visa mobile payments

Visa’s mobile payments service lives up to its billing as a quick and easy way to pay for goods and top up your account. Yet as Graeme Neill discovers, it’s not always easy to find somewhere that accepts it.

When I was shown the Visa mobile payments app at the business’ head office, I was surprised by how quickly it worked.

But when I left the office to try it out in the real world, I got off to a bad start.

The app is prepaid, like a Sim, and once you register your bank details and password, which took all of five minutes, you are good to go. Visa’s Pedro Sousa demonstrated how it works in practice – simply place your phone over a terminal, wait for the handset to buzz and money will be debited from your prepaid account.

There are currently around 140,000 contactless payment points in the UK, from Nando’s to McDonald’s and Greggs. Visa used the Olympics as a showcase for mobile payments but my experience was marred by several false starts. Firstly, I attempted to pay for my lunch at EAT in London’s Golden Square, but all the terminals were out of order. The next day, at YO! Sushi in Westfield White City, the restaurant’s manager looked at me so strangely when I produced my phone that you’d think I’d just asked if I could pay via tempura.

Thankfully I fared better at Pret A Manger in Soho, which showed just how quick and easy the app can be. I held my phone over a terminal, its light flicked to green, and the payment was processed in a matter of seconds.

I also used the app several times during a trip to the Olympic Park. In the Copper Box, the venue for two keenly contested women’s handball matches, staff were surprised but impressed that I was using my phone to pay for goods. ‘I’d heard these might be used but you’re the first I’ve seen,’ said one assistant. It wasn’t entirely seamless – while trying to buy a beer for the second match, I was left holding my phone over a terminal for several minutes to no avail. However, that was one exception amid several successful purchases across different shops and restaurants.

So what’s the verdict? The app itself is fantastic – quick and easy to use to pay for goods and top-up your account. However, greater education for shops and restaurants is clearly needed. My survey, albeit an unscientific one, was initially frustrating as staff seemed either unwilling to accept payments or had no idea what I was talking about.

Visa said it is using the trial to educate retailers about the potential of mobile payments and pledged to visit any stores where it didn’t work. But it needs to iron out the creases quickly. If the app is rejected several times, consumers may be more inclined to stick with cash or card in the future.

Written by Mobile Today
Mobile Today


Please wait...

Please write code to prove you're human