Mobile Payments Seen as ’Mainstream’ for Consumers within Four Years, says KPMG Survey

Autor: Bancherul.ro
2011-10-06 14:52

As companies race to take advantage of the mass adoption of smartphones and rapid development of new technologies to offer mobile payment services, executives believe the use of a mobile phone or a device to make payments or conduct banking transactions will require four years to become widely accepted by consumers, according to global survey of business executives by KPMG International.

2011 KPMG Mobile Payments Outlook, a KPMG survey of nearly 1,000 executives in primarily the financial services, technology, telecommunications, and retail industries globally found that 83 percent of the respondents believe that mobile payments will be mainstream within four years, compared to only nine percent who see them as mainstream today. In fact, 46 percent believe mobile payments will be mainstream within two years.

“We believe that the accelerated adoption of smartphones and other mobile devices (e.g. tablets) as well as the convenience of using these devices whenever and wherever open up a myriad of opportunities that will drive mobile payments at a much faster rate than our respondents anticipate,” said Mihai Rada (photo), Director Management Consulting in KPMG Romania “Despite the relatively low adoption of the mobile payments deployed in the Romanian market starting early 2000’s, we consider that there is good potential for new business models and supporting technologies to be deployed. A wide variety of payments solutions is ready for adoption and interest among consumers in using mobile payments is growing, in line with the industry’s readiness to deploy them.”

Seventy-two percent of the executives surveyed said that mobile payments are now or will be reasonably important in the future, with specialist online systems building on its leading position as a payment method, and m-banking and near field communication (NFC) gaining significantly greater traction than today. Fifty-eight percent said they have a mobile payments strategy in place.

The KPMG Report discovers that while there is consensus about the significant value of this opportunity among executives across geographies and industries, the type and size of opportunity varies between developed and developing countries depending on depth and reach of the financial infrastructure in place. “We believe that those firms willing to engage in cross-industry partnerships and ‘ co-opetition’ are more likely to succeed and dominate the market due to the complex set of business relationships required to deliver mobile payments to a mass market,” said Aurelia Costache, Partner Management Consulting in KPMG Romania.

With the mobile payments industry poised to make a major leap in the coming years, several players are expected to play significant roles, though two groups of financial institutions are the current front-runners, say respondents. Banks, which scored the highest in level of importance in the value chain, and credit card companies will have the most important roles, according to business leaders globally. They placed telecommunications companies third, ahead of specialist online payment players (e.g. PayPal, Boku, Obopay), online service provider giants (e.g. Google, Facebook, Amazon), retailers and technology companies.

While the majority of the business leaders surveyed believe consumers are currently concerned about security and privacy when using mobile devices, they believe other factors are more compelling attributes of a successful mobile payment strategy. Specifically, 81 percent believe convenience/accessibility is the highest attribute, followed by simplicity/ease of use, at 73 percent, security, at 57 percent, and low cost, at 43 percent.

At the same time, business leaders, globally, view security as the main challenge to developing mobile payments strategies. Technology and adoption of the technology is a distant second, followed by privacy.

“The business leaders understand that when it comes to consumers choosing a provider based on security, reputation can make the difference, and any damage to a business’s brand can prove costly, even to the extent of being a showstopper,” said Mihai Rada, Director Management Consulting in KPMG Romania. “As a result, leading businesses are adopting multiple approaches to alleviate customers’ privacy and security concerns.”

Mobile Payment Methods

Commercial success can be ultimately tied to the prospects for the five current payment methods which are battling for a share of the market. The KPMG survey respondents, globally, see specialist online systems leading the pack, because this method already has significantly greater penetration than alternatives, and its penetration is expected to increase. Respondents said that specialist online systems have the greatest prospect for success, followed by mobile banking, NFC, carrier billing and the “mobile wallet.”

“While KPMG believes that these forms of mobile payment will all gain some traction, our view is that M-Wallet is one of the most exciting and promising payment opportunities. M-Wallet provides the momentum to move beyond payments, to participate in the entire chain of mobile commerce, from consideration and brand awareness to after-sales loyalty and care,” said Mr. Rada.

M-wallet – uses a mobile device as a wallet with account and transaction information stored on the device’s SIM card.

M-banking – direct access to bank services and information via the mobile device

NFC (Near Field Communications) – short-range wireless communication technology that enables exchange between devices, such as between a cell phone and a point of sale device at a checkout counter.

Specialist Online systems – online payment processing systems such as Google checkout and PayPal.

Carrier billing – purchases are charged to the mobile phone bill

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