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Mobile payments industry to experience monumental growth in 2011: mopayBy
The massive growth of the market in North America, increased consolidation and lower transaction costs are the top trends that will have a significant impact on the blossoming mobile payments industry in 2011.
That is according to mopay Inc., a payment service provider for online merchants, which forecasts considerable momentum and movement in the global mobile payments industry in 2011. Mopay is the mobile messaging and payment unit of MindMatics AG.
Mobile Commerce Daily’s Dan Butcher interviewed Kolja Reiss, managing director of mopay, Palo Alto, CA. Here is what he had to say:
How has mobile changed the game for retailers and merchants?
The mobile phone can do everything that the wallet can do – and most of it even better than the wallet as far as retailers and merchants are concerned.
The mobile phone easily carries coupons, handles a variety of rewards cards and tools and – last but not least – can be used to pay during the check-out process.
There is only one big difference: Consumers do not like their wallet, but they like their mobile phone.
As most retailers and merchants are striving to make any shopping experience a fun experience, it seems natural to switch from using the wallet to the mobile phone, as it also provides so many features that retailers and merchants are able to utilize, for example, location-based services—even though they have yet to take off.
What were the biggest trends and advancements in mobile commerce and payments over the course of 2010?
The biggest trend in 2010 is that, for the first time, payments, Internet and telecom industry heavyweights have joined forces to innovate around mobile payments.
In the past decade, most big players “danced around” mobile payments without a clear vision.
This seems to have changed now: the largest mobile network operators in the U.S. have launched various initiatives in 2010, and credit card issuers actually partnered with them on a few, adding more knowledge and power to those initiatives.
As for direct-to-mobile billing, it was a huge step for the industry to see Verizon Wireless and AT&T opening up their networks, and we hope T-Mobile and Sprint to follow shortly.
Will the mobile wallet and contactless mobile payments at the POS via NFC/RFID finally become a reality in 2011, or will we have to wait until 2012?
The challenge seems to be to update the point-of-sale infrastructure as well as the mobile phones so that both sides support NFC payments.
Throughout 2011, we will see more and more installations and “trial phases,” but we will not meet a single person in 2011 that does not carry cash or a credit card anymore, completely relying on his NFC-enabled mobile phone.
However, it might be a realistic scenario for 2012.
What predictions do you have for the mobile commerce/retail/payments ecosystem in 2011?
Mobile payments will become a significant method to pay for goods and services online.
AT&T and Verizon Wireless have recently announced they will open their networks, signaling a major opportunity for mobile payment penetration in the U.S.
In 2011, mopay predicts that major merchants, particularly ecommerce merchants, will add mobile as means of payment and it will become ubiquitous before the 2011 holiday season.
2011 will be known as the year of major investments and consolidation in the global mobile payments industry.
In 2010, there was much discussion on this topic as major venture capital deals closed.
In 2011, the opportunity for increased consolidation is plentiful, with major industry players – such as credit card issuers, handset manufacturers, telecommunications companies and blue-chip Internet heavyweights – likely to acquire top mobile payment providers.
New forms of currency will continue to grow.
Facebook Credits launched in 2010 and have already emerged as a meaningful form of currency.
Many players in the payment space have introduced their own virtual currency in recent months, but it is questionable if all of them make sense and will survive.
In 2011, major entertainment and social networking providers will continue to introduce their individual forms of currency or branded checkout system.
Mobile payments will officially expand beyond the digital realm and into the physical goods environment across the globe.
Almost all mobile payment providers are currently focusing their products and deals on virtual and digital goods merchants.
This is about to change—mopay already supports the purchase of physical goods through its platform in 28-plus countries, and we expect this number to go up significantly in 2011 as the acceptance of mobile payments will grow rapidly.
Korea and Japan, where mobile payments for physical goods is commonplace, are good examples of how mopay sees the payment future in the physical goods space.
Lower transaction costs will be available from all major U.S. carriers.
A virtual good has a margin which still makes high transaction costs commercially feasible.
Digital goods, often bounded with royalties and concessions, require much lower transaction fees—the usually high production cost and thus low margin of physical goods almost always rules out high transaction fees.
The mobile payments industry has joined forces with carriers worldwide to find a remedy.
Although mobile payment transactions will remain more expensive than traditional credit card transactions, 2011 will see major movement towards the new global transaction cost benchmark of 10-15 percent.
Dan Butcher, associate editor, Mobile Commerce Daily
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