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Thursday, February 3, 2011

Significant growth predicted for mobile payments industry this year

Mobile payments company mopay has forecast ‘major momentum and movement’ in the global mobile payments industry this year. It’s identified a number of trends to watch for during the next 11 months, including massive growth of the mobile payment market in North America, increased consolidation and lower transaction costs.

mopay predicts that:

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, signalling a major opportunity for mobile payment penetration in the US. 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’s 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+ countries, and expects 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 US 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 physical goods almost always rules out high transaction fees. The mobile payments industry has joined forces with mobile network operators globally 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%.

Kolja Reiss, managing director of mopay, said “This past year was a boom year for the mobile payments industry around the globe. With the foundational work that occurred in 2010 past us, 2011 is shaping up to be the year that mobile payments see widespread penetration around the globe. At mopay, we have been thrilled to see that the leadership we built in Europe and Asia is resonating in North America; US consumers and merchants alike are ready for mobile payments and we predict that 2011 will be a true turning point for the industry.”

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Author: The Fonecast
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