Worldwide Purchase Volume Over Mobile Devices Will Exceed $1 Trillion by 2017, According to IDC Financial Insights
IDC Financial Insights today announced a new report, Technology Selection: Worldwide Mobile Payments 2012-2017 Forecast (Doc #FIN237814), which presents a worldwide forecast of consumer and business spending over mobile networks from 2012 to 2017. According to the new research, by 2017, worldwide purchase volume over mobile devices will exceed $1 trillion. Most of this volume will be in the form of mobile commerce, which includes digital media consumed on the device as well as ecommerce through a mobile Web browser. Although NFC payments are still limited, IDC Financial Insights forecasts rapid growth driven by handset and point-of-sale terminal upgrades. While the resulting forecast is large in dollar terms, it is a tiny fraction (just above 2.5% in 2017) of the total amount of worldwide commerce that is theoretically addressable by mobile payments.
Key highlights from the report include the following:
- Most of the dollar volume will be in the form of ecommerce spending done over mobile devices.
- Proximity payments will ride upgrades in point-of-sale and mobile device technology to become the second-largest category of mobile payments spending, about evenly divided between the two methods.
- Person-to-person or point-to-point (P2P) fund transfers will be a distant third, mainly due to a lack of common standards for sending money across borders using mobile devices as well as a lack of locations for adding cash to and withdrawing cash from the system.
The worldwide forecast is focused on consumer and business spending over mobile networks from 2012 to 2017, not on spending by service providers on technology to enable such services. Instead, it includes purchases of digital and physical products and services as well as direct fund transfers where no product or service is exchanged. IDC Financial Insights' approach to forecasting the growth of mobile payments has been based on the assumption that most mobile payments actually substitute for existing payment methods.
There are substantial uncertainties in the forecast, depending on whether financial institutions, mobile telecommunications operators, and retailers can agree on common standards for payments. If each sector insists on going its own way, mobile payments growth will underperform the forecast; if the market consolidates into a few dominant schemes for each country, then mobile payments could be much larger.
Impact on Financial Institutions
The outlook for financial institutions is good, in that the vast majority of mobile payments volume will be driven by traditional card products, either through mCommerce or through NFC. As such, financial institutions should view mobile payments as an opportunity to leverage the information they possess on their customers' shopping habits and demographic characteristics. Mobile operators and device manufacturers have given banks unprecedented access to their customers at all times and in all places. To be successful, financial institutions should implement targeted marketing and reward programs as a supplement to their regular loyalty programs as customer loyalty will be to the company that provides them with the best value in the form of savings and information. Second, financial institutions should facilitate the incorporation of their cards into NFC and mobile wallets to capitalize on the growth of mCommerce and NFC proximity payments.
According to Aaron McPherson, practice director, Worldwide Payment Strategies at IDC Financial Insights and the lead author of the report, "The growing prevalence of smartphones is enabling a variety of mobile payment methods, which combined are becoming a significant share of global commerce. We expect growth rates to continue to accelerate as consumers and retailers become more comfortable with the technology."
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About IDC Financial Insights
IDC Financial Insights assists financial service businesses and IT leaders, as well as the suppliers who serve them, in making more effective technology decisions by providing accurate, timely, and insightful fact-based research and consulting services. Staffed by senior analysts with decades of industry experience, our global research analyzes and advises on business and technology issues facing the banking, insurance, and securities and investments industries. International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology market. IDC is a subsidiary of IDG, the world's leading technology, media, research, and events company. For more information, please visit www.idc-fi.com, email email@example.com, or call 508-620-5533. Visit the IDC Financial Insights Community at http://idc-insights-community.com/financial.