The value of mobile commerce transactions conducted via mobile handsets and tablets will exceed $3.2 trillion by 2017, up from $1.5 trillion this year, according to a new report from Juniper Research.
The increasing popularity of mobile devices for bill payment is reflected in the fact that the mobile banking sector accounts for the lion’s share of transaction values over the next five years, with the treasury and corporate sector still lagging behind consumer uptake. Mobile website optimisation still remains a concern across all sectors, however, adds the report as it calls for better adaption to the mobile channel.
The Juniper report entitled ‘Mobile Commerce Markets: Sector-by-Sector Trend Analysis & Forecasts 2013-2017’ looks at a number of key industries for mobile m-commerce transactions, including retail, airlines and financial institutions (FIs). All these sectors are emphasising the importance of the mobile channel as an engagement, delivery and payment mechanism device, which is why the report focuses on them. Treasurers working in these sectors will likely have to get used to the growing prevalence of the mobile channel but it shouldn’t present any difficulties in being absorbed into standard procedures. For FIs it presents a growth channel. The activities of Visa and MasterCard in regard to near field communication (NFC) contactless certification (see the MWC 2013 show report here from our sister site bobsguide) is cited by Juniper as an example, alongside the airline industry’s wider electronic e-ticketing initiative, where mobiles can be used to board planes, as key developments in the area.
Mobile wallet services will also spur the market, concludes Juniper in its report. These apps are already providing first time financial access in many emerging markets to poorer individuals where the proportion of ‘unbanked’ adults sometimes exceeds 50%. In the same emerging markets, partnerships involving mobile money between OTT storefronts and mobile network operators (MNOs) – enabling payment via carrier billing – are enabling greater access to the digital economy.
There are still barriers to adoption, however, the report notes. “A significant minority of retailers have yet to optimise their sites for mobile,” explains report author, Dr Windsor Holden, when considering the hurdles to widespread adoption of m-commerce. “Unless retailers ensure a seamless, user-friendly mobile shopping experience, they will fall behind competitors who are already using mobile channels to enhance customer relationships.” The same could be said for banks, of course, which could be disintermediated if they don’t meet their customer’s expectations.
The report also looked at the lengthy Point-of-Sale (PoS) infrastructure replacement lifecycles that are prevalent in many shops and transport systems, highlighting a perceived reluctance to undertake expensive upgrades without a demonstrable return on investment. For banks, however, facing competition from Square, iZettle, PayPal Here and other PoS-payment settlement devices that can use a mobile device, doing nothing is not an option. Their existing payment infrastructure could be used as the ‘rails’ without any of the valuable customer data being available to them unless they act.
SWIFT has announced that it has successfully completed the first phase of the global payments innovation (GPI) initiative pilot, clearing the way for the go-live of the service in early 2017.
Sentiment in the financial services sector deteriorated in the three months to September, as firms digested the challenges of lower interest rates and the uncertainty caused by the vote to leave the European Union (EU), according to the latest CBI/PwC Financial Services Survey.
However, a London summit on the industry’s introduction of the technology cautions that testing and acceptance are still at an early stage and firms should proceed with caution.
Despite faster payment technologies, business-to-business payments by paper cheque show no sign of decline from three years ago.