The forecasted NFC transaction value has been reduced by more than 40 percent because adoption of the technology was lower than expected in all markets in 2012 and because high-profile services such as Google Wallet and Isis are struggling to gain traction. NFC is expected to account for just 2 percent of total transaction value in 2013 and 5 percent by 2017.

“I don’t find the reduction surprising,” said Drew Sievers, co-founder/CEO of mFoundry, San Francisco. “The two ‘leaders’ in NFC – Google and ISIS – are having visibly slow adoption.

“There is no significant value proposition so there is no catalyst for consumes to adopt the technology,” he said.

“I think you’ll see cloud-powered wallets from banks and merchants rapidly bypassing the slower NFC-enabled wallets.”

No clear winner
Gartner expects NFC adoption to continue to be slow over the next few years. However, growth is expected to start to increase in 2016 once the penetration of NFC-enabled devices and contactless readers increases.

North America’s mobile payment transaction value is expected to grow 53 percent in 2013 to reach $37 billion. However, growth is being impacted by low adoption rates for NFC payment services as well as the fact that many merchants have launched their own mobile payments apps resulting in the lack of a clear winning strategy.

Overall, Gartner predicts that worldwide mobile payment transaction values will reach $235.4 billion in 2013, a 44 percent increase from $163.1 billion in 2012. The number of mobile payment users worldwide is expected to reach 245.2 million in 2013, up from 200.8 million in 2012.

The overall forecast has been lowered for total transaction value because of lower-than-expected growth in mobile payments in 2012, especially in North America and Africa.

Gartner has previously forecast that mobile payment transaction values in 2012 would grow at a rate of 61.9 percent and surpass $171 billion.

Money transfers gain traction
The average annual growth rate for mobile payments between 2012 and 2017 is expected to be around 35 percent.

As a result, mobile payment transaction value is expected to reach $721 billion by 2017 and reach 450 million users.

Money transfers are expected to account for 71 percent of total transaction value in 2013, while merchandise purchases will account for 21 percent. These numbers make money transfers and merchandise purchases the two largest contributors to mobile payments transaction value by far.

However, Gartner reports that worldwide users are not purchasing as much via mobile because the buying experience on their devices are not optimized.

As a result, users are spending less via mobile devices than via online ecommerce services and at retail outlets.

By 2017, merchandise purchases are expected to account for approximately 23 percent of the total forecast value.

Money transfers are a leading use case for mobile payments because the services are more widely available and transaction costs are lower than those for traditional bank services. As a result, users are transacting much more frequently, with Gartner forecasting that money transfers will account for almost 69 percent of the total value in 2017.

Asia/Pacific overtakes Africa
Bill payment value is expected to grow 44 percent in 2013 and to grow consistently throughout the forecast period to account for approximately 5 percent of the total forecast by 2017.

Higher per-transaction values is helping to drive growth here as more consumers in developed markets adopt mobile bill payments while users in emerging markets transact at higher value than originally forecast.

By region, Asia/Pacific’s mobile payment transaction value is expected to grow 38 percent in 2013 to reach $74 billion and $160 billion in 2016. The region is expected to overtake Africa to become the largest region by transaction value by 2016.

Africa’s transaction value is forecast to reach $160 billion in 2016.

Western Europe’s transaction value is expected to reach $29 billion in 2013, up from $19 billion in 2012. Growth is being postponed by a reduction in the average number of transactions per year.

“Cloud-based wallets are quickly gaining traction since they have less friction than similar NFC-powered options,” Mr. Sievers said.

“The NFC Game of Thrones activities are opening, and even encouraging, alternative technologies to win,” he said.

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York