First of all, welcome back and I hope you had a great Christmas and that the New Year will bring all you wish for.
In my first blog of 2010 I decided to focus on the market opportunity in the Mobile Payments space. One of my predictions for 2010 is that this area will grow and start to attract more than just the early adopters. Making payments on mobile devices will become a natural occurrence over the next 18 months, whether it's explicit or built into applications hosted on the device.
According to a paper written by Cap Gemini, there were only 30 million using their mobile devices to make payments at the end beginning of 2008. That represented about 1% of the mobile market, so only one in a hundred used their phones for making payments of any kind. During 2009 the mobile payments market has changed significantly with the emergence of significant usage in mainly the developing world. Safaricom and Vodafone made the most impact, from a headline perspective, with the successful launch of M-PESA in Kenya. M-PESA secured 5 million users, in Kenya alone, as of January 2009. £145m worth of transactions were handled in the first 15 months following launch, and, probably most amazingly, over 10% of Kenya's entire GDP flowed through the M-PESA system during 2009... No wonder the Kenyan banks are concerned about this new kid on the block... One downside to M-PESA though is that it uses a network of independent retailers to act as agents for collecting cash deposits and changing M-PESA phone credits into cash for withdrawal. Previously these agents have been enjoying 375% ROI on sales of pay-as-you-go mobile phone credits. M-PESA is now the main sale for these agents and it only delivers a paltry 94% ROI so you can foresee distribution issues for this type of mobile payments service. M-PESA is now available in the UK ( http://wirelessfederation.com/news/tag/m-pesa/ ) allowing cross border remittances to be made via a mobile device, although I think they've got their pricing wrong - too expensive to really eat into the traditional remittance providers', such as Western Union, market share.
For Mobile Payments in general, the analyst forecasts bring good tidings. Juniper are reckoning on the worldwide mobile payments industry being worth $22bn by 2011 with 204 million users. Sounds good, but when you consider there are about 4bn mobile devices in use around the globe, that means that only 5% of those with mobile devices are using them for mobile payments. Personally I think the numbers will be much higher, especially if you consider making payments for goods or services using a credit card via the mobile web also constitutes mobile payments.
It goes without saying that the biggest challenge for Mobile Payments will be security, or at least the perception of security. After all, how secure is a credit card? At least a mobile can be made more secure with the use of software to protect it and maybe finger print recognition etc.
Other challenges to take up will be the battle between the banks and the mobile operators on who owns the secure element of the transaction and therefore who can make claim to the transaction fees. If both end up charging fees I fear a transaction undertaken via the mobile will be too expensive to hit mass market status.
I think over the next few months we'll see more and more credit/debit card transactions undertaken over the mobile web - in the Western world, practically a direct replacement of making payments via the Internet now. This will then develop to an extent where the secure element will be on the mobile, so you can throw away your credit card and scan the mobile device at the chip and pin console in retail outlets, or make automated payments online. I still think micro payments, in the West, will take another two years or more to become common, but in the developing world where access to the Internet is limited and travelling distances from homes and places of work to banks are long and many don't even have bank accounts never mind credit cards, will continue to lead the way in terms of mobile payments growth.
The fact remains that anyone involved in Mobile Commerce, from marketing to payments, loyalty to ticketing, is going to have a very exciting 2010...
In my first blog of 2010 I decided to focus on the market opportunity in the Mobile Payments space. One of my predictions for 2010 is that this area will grow and start to attract more than just the early adopters. Making payments on mobile devices will become a natural occurrence over the next 18 months, whether it's explicit or built into applications hosted on the device.
According to a paper written by Cap Gemini, there were only 30 million using their mobile devices to make payments at the end beginning of 2008. That represented about 1% of the mobile market, so only one in a hundred used their phones for making payments of any kind. During 2009 the mobile payments market has changed significantly with the emergence of significant usage in mainly the developing world. Safaricom and Vodafone made the most impact, from a headline perspective, with the successful launch of M-PESA in Kenya. M-PESA secured 5 million users, in Kenya alone, as of January 2009. £145m worth of transactions were handled in the first 15 months following launch, and, probably most amazingly, over 10% of Kenya's entire GDP flowed through the M-PESA system during 2009... No wonder the Kenyan banks are concerned about this new kid on the block... One downside to M-PESA though is that it uses a network of independent retailers to act as agents for collecting cash deposits and changing M-PESA phone credits into cash for withdrawal. Previously these agents have been enjoying 375% ROI on sales of pay-as-you-go mobile phone credits. M-PESA is now the main sale for these agents and it only delivers a paltry 94% ROI so you can foresee distribution issues for this type of mobile payments service. M-PESA is now available in the UK ( http://wirelessfederation.com/news/tag/m-pesa/ ) allowing cross border remittances to be made via a mobile device, although I think they've got their pricing wrong - too expensive to really eat into the traditional remittance providers', such as Western Union, market share.
For Mobile Payments in general, the analyst forecasts bring good tidings. Juniper are reckoning on the worldwide mobile payments industry being worth $22bn by 2011 with 204 million users. Sounds good, but when you consider there are about 4bn mobile devices in use around the globe, that means that only 5% of those with mobile devices are using them for mobile payments. Personally I think the numbers will be much higher, especially if you consider making payments for goods or services using a credit card via the mobile web also constitutes mobile payments.
It goes without saying that the biggest challenge for Mobile Payments will be security, or at least the perception of security. After all, how secure is a credit card? At least a mobile can be made more secure with the use of software to protect it and maybe finger print recognition etc.
Other challenges to take up will be the battle between the banks and the mobile operators on who owns the secure element of the transaction and therefore who can make claim to the transaction fees. If both end up charging fees I fear a transaction undertaken via the mobile will be too expensive to hit mass market status.
I think over the next few months we'll see more and more credit/debit card transactions undertaken over the mobile web - in the Western world, practically a direct replacement of making payments via the Internet now. This will then develop to an extent where the secure element will be on the mobile, so you can throw away your credit card and scan the mobile device at the chip and pin console in retail outlets, or make automated payments online. I still think micro payments, in the West, will take another two years or more to become common, but in the developing world where access to the Internet is limited and travelling distances from homes and places of work to banks are long and many don't even have bank accounts never mind credit cards, will continue to lead the way in terms of mobile payments growth.
The fact remains that anyone involved in Mobile Commerce, from marketing to payments, loyalty to ticketing, is going to have a very exciting 2010...
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