Smartphone and tablet popularity brings maturity to mobile payment marketplace' says KPMG
- Value of M-commerce transactions to grow at almost 100% per year as consumers demand faster service and better access to goods
- Cash and credit card purchases predicted to fall as smartphone capabilities take hold
- Telco and tech companies have huge opportunity to boost profitability as retailers express desire to offer m-payment services
"Growth in the m-payments marketplace will be driven by customers' increasing need for convenience and the development of a raft of new applications enabling commerce in the palm of our hands. Today premium SMS dominates mobile payments, but by tomorrow contactless and cloud-based services will dominate, with an expected market share for contactless of 37 percent by 2015," says David Hodgkinson, senior manager in KPMG's customer and channel consulting team.
Acceptance of m-commerce as an alternative to cash or credit card payments owes as much to the expansion of the smart-phone marketplace, as it does to retailers recognising the need to adapt. According to KPMG's report, smart-phone shipments accounted for 29 percent of all mobile phone sales in 2011 - almost double the figure sold in 2009 (15 percent). The data also shows that 21 percent of retailers already view m-payment capability as important enough to be their ‘main activity or, at least, a key enabler'. Just 2 percent see m-payments as unimportant, believing it will have no bearing on their organisation.
It is also clear that the core technology players are jostling for position, with the reporting citing examples such as Acer's announcement to launch NFC-enabled smart-phones before the end of this year and HTC teaming up with the Chinese bank card network, China UnionPay, to turn their smart-phones into digital wallets for use in designated department stores, restaurants, supermarkets and cinemas.
Gerry Penfold, partner within KPMG Risk Consulting, says: "There is certainly scope for collaboration between smart-phone manufacturers, telecom companies and retailers but the big, unanswered question revolves around who the customer will trust with their data and their m-cash. Battle lines will be drawn around issues such as security, infrastructure and interoperability of devices. For consumers, speed and security of payment will be the mark of success, but for technology and telecoms companies, speed to market will be critical and how quickly they can respond will depend on the impact of regulation. Clearly, though the winners will be the companies that can provide the richest consumer experience with the greatest convenience."
The report concludes by warning that tightening regulatory requirements will force the players to consider how they use customer data. For example, with China becoming a significant market for m-payments, the government has introduced licence requirements for third-party payment providers. Similarly, the European Payments Council has issued guidelines to develop standards around m-payments.