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Mobile commerce evolving from early innovation to mainstream adoption: Javelin

March 26, 2010

Jim Van Dyke is director of payments research at Javelin Strategy & Research

Jim Van Dyke is founder/president of Javelin Strategy & Research

LAS VEGAS – A Javelin Strategy & Research analyst said the he believes that mobile commerce is evolving from early innovation to mainstream adoption at a presentation at CTIA.

Bullish signs for mobile commerce include ubiquitous devices, the increasing number of banks offering mobile financial services, consumer curiosity, the smartphone frenzy, affordable data plans, demand for downloadable applications, a range of products and price points and new capabilities.

“There are a number of technology changes that make up a revolution, and mobile money will be a revolution, but it will be death by a thousand cuts,” said Jim Van Dyke, founder/president of Javelin Strategy & Research. “You won’t see the adoption curve of PayPal, which is never likely to be replicated.

“PayPal filled a gap that was created by the emergence of a particular platform, auctions, and P2P payments was the company’s third attempt to get it right, and there was some luck involved,” he said.

“It’s much more likely that the mobile money revolution will entail a lot of hard work—proverbial trench warfare.”
Mr. Van Dype spelled out the definitions of the various categories under the umbrella “mobile money.”

Mobile authentication is the verification of consumers’ identity.

“This is one of many security-related mobile finance apps,” Mr. Van Dyke said.

Mobile banking is monitoring and managing finances.

Smartphone users overindex for mobile banking usage. Fifty-one percent of iPhone users in the U.S. are mobile bankers, compared to 17 percent of everyone else in the U.S.

Mobile commerce/shopping is buying via mobile, often for mobile digital content or virtual goods.

“Mobile money” has evolved from simple access to money monitoring to transactional mobile banking and payments.

The first stage provided consumers access to financial services via SMS, WAP/browser and downloadable applications.

The second stage allowed consumers to monitor their money via alerts, two-way alerts, out-of-band notifications and informational mobile banking, letting them view balance, make deposits and find the closest ATM.

The third stage, which is still evolving, includes mobile bill pay, mobile P2P payment, mobile contactless payments, mobile deposit capture, mobile enrollment, payment wallet, payment and informational transaction wallet and payment, informational transaction and ID/authentication wallet.

A survey by InStat Technology in December 2009 found that 64 percent of Americans are interested in using a mobile wallet for commerce.

Based on five key dimensions, the U.S. market seems poised for mobile commerce to take off: user behavior, credit issuers, payment networks, merchants and POS equipment.

Americans make extensive use of credit/debit cards, and mobile penetration is high, as is the usage of mobile data applications.

Most major credit issuers in the U.S. already have contactless initiatives on the market.

The major payment networks in the U.S. already have contactless initiatives on the market.

There is high market share concentration in key U.S. industries.

U.S. industry leaders have begun to deploy contactless payment infrastructure. Contactless POS terminals are already in place in tens of thousands of stores.

Also, U.S. vendors already adhere to the ISO/IEC 14443 standard, so one contactless terminal accepts all major forms of contactless payment, including phones with NFC chips preinstalled, which will hopefully reach the market soon, most likely in 2011.

While there are many encouraging signs, players across the entire value chain need to collaborate to bring mobile commerce to fruition.

These include merchants, payment terminal providers, acquirers, payment networks, issuers, trusted services managers, mobile wallet aggregators and handset manufacturers.

Mobile marketing, mobile payments
Mobile marketing is attracting cross-selling and keeping customers via mobile devices.

“Last year consumers received 10 percent more mobile marketing messages from the telco industry compared to the previous year,” Mr. Van Dyke said. “Also, retailers gained 10 percent points last year over 2008, while financial services actually slipped 10 percent.

“They are in trouble in mobile marketing,” he said. “It’s troublesome if they don’t think they need the telcos to market their services.”

Mobile payments is transferring money.

“There are as many people doing mobile money transfers as there are people doing traditional money transfers by going to a bricks-and-mortar location such as Western Union, and those types of companies going over to mobile,” Mr. Van Dyke said.

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Dan Butcher is associate editor on Mobile Commerce Daily and Mobile Marketer. Reach him at

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