The mobile payment market is growing slower than expected in developing markets, says Gartner.
The research group says worldwide mobile payment users will surpass 141.1 million in 2011, a 38.2% increase from 2010.
“Worldwide mobile payment volume is forecast to total $86.1 billion, up 75.9% from the 2010 volume of $48 9 billion.”
However, despite these strong growth projections, the mobile payment market is growing slower than expected in developing areas like Africa.
Behaviour change
"In developing markets, despite favourable conditions for mobile payment, growth is not as strong as was anticipated. Many service providers are yet to adapt their strategies to local requirements, and success models from Kenya and the Philippines are unlikely to be translated to other markets," says Sandy Shen, research director at Gartner.
She adds that, while developing markets have favourable conditions for mobile payments, such as high mobile penetration and low banking penetration, this is no guarantee of success, unless service providers adapt their strategies to local market requirements.
Shen says the biggest hurdle is the need to change user behaviour by convincing consumers to pay with mobile phones instead of cash and cards.
Gartner expects SMS and Unstructured Supplementary Service Data (USSD) to remain the dominant access technologies in developing markets due to the constraints of mobile phones.
“Wireless Application Protocol (WAP) will remain the preferred mobile access technology in developed markets, where the mobile Internet is commonly available and activated on the phone.”
Gartner adds that mobile app downloads and mobile commerce are the main drivers of WAP payments, and WAP will account for almost 90% of all mobile transactions in North America and about 70% in Western Europe in 2011.
Killer apps
“Money transfers and prepaid top-ups will drive transaction volumes in developing markets.”
The company says these are seen as the "killer apps" in developing markets, where people value the convenience of sending money to relatives and topping up mobile accounts.
This is most obvious in Eastern Europe, the Middle East and Africa, where these two services will account for 54% and 32%, respectively, of all transactions in 2011.
In developed markets, companies are trumpeting the prospects of near-field communication (NFC) without realising the complexity of the service model, says Gartner.
“We believe mass market adoption of NFC payments is at least four years away.”
This is the reason local players say Google's mobile commerce platform, the Google Wallet, will take time before it has any local impact.
NFC has long been touted as the technology most likely to grow mobile commerce, but has yet to gain significant traction.
The Google Wallet essentially enables a user's mobile phone to act as a credit card, allowing the user to tap it at a pay point to complete a sale.
First National Bank (FNB) eWallet Solutions CEO Yolande Van Wyk says for people to take up a new technology, they must have a real reason to do so.
“We're still struggling just to get mass take-up on the use of debit cards in SA. We're seeing a vast number of people still withdraw all of their money after pay day and use cash for all transactions for the rest of the month.”
Local growth
FNB's eWallet allows for money to be sent to anyone with a valid South African phone number. The money can be withdrawn from an ATM without the recipient needing a bank account. The money can also be used to buy airtime, pay for goods and services online, and to transfer to another eWallet.
In May, the bank said the number of eWallet holders doubled in six months, from 250 000 to 500 000.
Other mobile money services have been unveiled in SA within the last few years in order to help the unbanked gain access to financial services.
M-Pesa from Vodacom and Nedbank is said to have gathered over 60 000 users since its inception last year. The service was originally released in Kenya where it has 10 million users. Absa also offers a similar service called CashSend.
Last year, Standard Bank partnered with Spar to provide a person-to-person money system that allows users to send and receive money at Spar outlets using a cellphone.
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