The Road to Mobile Payment

It seems that every day another major announcement occurs in the payment space and eclipses yesterday’s news.  The seminal union of Square and Starbucks captivated the payment audience until buried by news of the PayPal and Discover Financial Services partnership.  When the discussion features the mobile handset and its role in the evolution of payments, the replacement rate accelerates. Euromonitor International’s consumer finance research seeks to address the key underlying issue when it comes to mobile: how long will it take to become a mainstream channel?

The vast ecosystem supporting mobile commerce presents one of the major challenges to adoption.  Issuers, operators, merchants, mobile handset manufacturers, mobile service providers, to name a few, all jockey to gain a foothold in the mobile commerce value chain.  Amidst all the positioning, questions arise regarding control of data, ownership of the customer relationship, branding, etc.  As the industry deals with these various impediments it still leaves unanswered the most important question: are consumers ready for the transition from wallet to handset?

Several markets already demonstrate the seeds of a successful conversion to the mobile handset.  Canada, Singapore and South Korea offer significant drivers to edge mobile payment a bit closer to the mainstream.  In Singapore, governmental encouragement, and subsequent action highlight the tailwinds accompanied by governmental involvement.  These initiatives to bring mobile operators and banks together may provide the bedrock for meaningful NFC deployment and usage in Singapore.  In South Korea, the widespread installation or upgrading of NFC-capable infrastructure in high foot traffic, high transaction count merchants dovetails with the high number of NFC-enabled smartphones available in the market.

According to Euromonitor International’s latest data, the U.S. is expected to post the highest growth in mobile commerce value 81% (CAGR 2012-2017) followed by Hungary and Mexico. Euromonitor expects the U.S. to become the largest mobile commerce market in the world ($243 billion in 2017). Even with the anticipated significant uptake of the mobile handset as purchase channel in the U.S., mobile commerce would still only account for roughly 2% of consumer payment value.