According to IDC Financial Insight’s Worldwide Mobile Payments 2012-2017 report, which presents a worldwide forecast of consumer and business spending through mobile networks over the next five years, worldwide purchase volume over mobile devices will surpass $1 trillion by 2017.
The report includes purchases of digital and physical products and services, as well as direct fund transfers that do not involve the exchange of any product or service.
Most of the purchase volume will come from mobile commerce, IDC said, which includes purchase of digital media on the device as well as e-commerce through a mobile web browser.
Proximity payments, which are made by waving a mobile phone with Near Field Communication (NFC) technology near a merchant’s point-of-sale (POS) terminal, will ride upgrades in POS and mobile device technology to become the second-largest category of mobile payment spending, IDC said.
Person-to-person (P2P) fund transfers will come third, IDC said, limited by a lack of common standards for sending money across borders using mobile devices.
In addition, P2P fund transfers could suffer from a lack of locations for adding to and withdrawing cash from the system, it said.
While its forecast for mobile payments in 2017 is large in dollar terms, IDC said it is a tiny fraction (just above 2.5%) of the total amount of worldwide commerce that is theoretically addressable by mobile payments.
"The growing prevalence of smartphones is enabling a variety of mobile payment methods, which combined are becoming a significant share of global commerce," said Aaron McPherson, practice director of Worldwide Payment Strategies at IDC Financial Insights. "We expect growth rates to continue to accelerate as consumers and retailers become more comfortable with the technology.”
In driving the growth of mobile payments, IDC says financial institutions should view them as an opportunity to leverage the information they possess on their customers’ shopping habits and demographic characteristics.
This could include financial institutions implementing targeted marketing and reward programmes as a supplement to regular loyalty programmes, IDC said, in addition to incorporating their cards into NFC and mobile wallets to capitalise on the growth of m-commerce and NFC proximity payments.