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Mobile Wallets in the USA 2012 The US mobile wallet market in perspective
Roy Vella (MforMobile 2012b), Managing Director of Vella Ventures, included the following chart in a webinar presentation for MforMobile. In 2012 the total number of mobile subscriptions reached 6 billion out of a world population of 7 billion. Almost everyone has a mobile phone of some sort. Jarvis (2012a) reported that 1.2 million people had mobile Internet access in 2011. As Vellas chart shows, this number passed the 2 billon mark in 2012, and it is forecast to reach 2.9 billion by 2016. That is a massive target market for mobile wallets.
Source: Roy Vella, Managing Director, Vella Ventures An infographic published by Statista yields the following numbers of mobile payment users in various regions (Felix 2012). Number of mobile payment users by region, 2012 Africa North America Europe Latin America 57.8m 32.8m 26.7m 8.5m
Asia/Pacific 85.0m
Felixs numbers predate those compiled by Vella. Felix reported that there were more than 5 billion active mobile phone accounts in the world, but only 1.3 billion active debit and credit accounts. One of Felixs predictions is that the number of proximity mobile payment users in the US in other words, users of mobile wallets will soar from 2.7 million in 2012 to 48.1 million in 2016. That would equate to a compound annual growth rate (CAGR) of more than 100%.
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Source: Michael Dooijes, Executive Director, Head of Strategy and Innovation, Rabobank Zooming in on the US, the recent Mobile Payment Acceptance Survey by ControlScan and TransFirst (2012) revealed a number of illuminating facts on the adoption of mobile payments by small merchants. To borrow from the summary of the survey: Those who have relied on a credit card machine for face-to-face payments and a standard website for online consumers are now faced with a rapidly growing customer base that utilizes smartphones to make online purchases as well as comparison-shop from in-store locations. With approximately 50% of US mobile phone users now owning a smartphone and about 19% owning a tablet, the average American is empowered to seek out and purchase a product or service anywhere, any time. In fact, responses from a recent IDC Financial Insights survey show that 34% of people have made a purchase via a mobile device. Small business owners may be slow to recognize key indicators of changing consumer preference. These missed signals can lead to a sudden loss in market share as long-time customers are lured away by the competition. The majority (55%) of respondents reported that their websites are not currently optimized for mobile users (an additional 20% were unsure). Of the 55% acknowledging this lack in functionality, only 36% have plans to optimize within the next year.
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MforMobile recognized that the future of mobile wallets more than warranted a conference on the topic in the US, the 2nd Annual NFC Payments USA 2012 (MforMobile 2012a). The programme for the conference, set for Boston on December 10-11, was designed to cover many vital areas of this market sector: To examine competing payment technologies, ensure mass adoption and discover the next move for NFC to maximize revenue strategy. To bring together more than 150 senior-level industry experts in a direct response to the crucial, business-halting questions which banks, MNOs and payment providers are asking. To gain a financial perspective on NFC payments from leading banks and financial institutions. To discover how leading retailers are approaching mobile payments, and how MNOs are preparing for mass adoption and building successful relationships for future NFC initiatives.
Against all of this background, Greg Stuart, global CEO of the Mobile Marketing Association (MMA), has observed: If I were to sum up the value of mobile to marketers it would be this: Nothing gets a marketer closer to consumers than mobile. Nothing. (The Where Business 2012) Yet many businesses and agencies have not yet strategized how to take advantage of the coming mobile ecommerce wave. Simply put, many marketers are unsure how to harness the power of mobile, Stuart says. They know they need mobile. But the concept of mobile leading marketing efforts is still too unnerving and unfamiliar.
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Mike McDonnell, Vice President, Product Market & Client Solutions at Affinion Loyalty Group, has noted the following influences on adoption of mobile wallets (2012): Smartphone ownership is growing but is not yet at critical mass. The mobile wallet environment is extremely fragmented. There are great opportunities for merchants to run loyalty programmes to drive engagement with mobile wallets. Mobile security issues must be resolved.
In discussion with MforMobile, Matthew Mayo, Head of Business Development at MasterCard, and Steve Reynolds, President of the Mobile Data Association (MDA), offered this summing-up of the present situation (MforMobile 2012c): Standardising the mobile wallet technology has been and remains a major challenge. One recommended course for banks is to open their networks to third-party mobile wallets. Unfailing security in mobile wallets is paramount to ensure consumer confidence. Near Field Communication (NFC) will probably be the universal handset-to-till technology. The companies likely to benefit most from mobile wallets will be those that adopt a customer-first strategy.
In a detailed analysis, Perez (2012) discussed what he considered to be the five primary issues that must be addressed if mobile payments are to become the favoured method of payment.
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Technical interoperability
The lack of technical interoperability is seen as a major barrier to mobile payments everywhere (Rotondo 2012). Fragmentation occurs because of lack of agreement among mobile network operators, payment service providers, phone manufacturers and mobile app developers. Johnson (2012) elaborates: Interoperability has emerged as the watchword for developers as they bring their new innovations to market.
Operational relationships
Just because a group of organizations come together to share something of great interest and importance doesn't mean that it fits into their operations or core businesses, says Perez (2012). Cellular-news (2012) reported that partnerships between telecom operators and major financial institutions had been an effective way to deploy payment offerings. Cellular-news quotes Jean-Noel Georges, Global Program Director for ICT in Financial Services at Frost & Sullivan: "The industry seems to be reaching a tipping point. A number of factors like more NFC-ready mobile devices and new market participants are favouring the development of the market especially NFC-based payments."
Regulatory clarity
Perez (2012) clarifies why there is so much uncertainty worldwide about the regulatory environment in which mobile payments are taking place: In fairness to the framers, no one could have imagined this world. It's time to understand the underlying technologies, new players, cash-in-cash-out models and safeguards, weigh the potential social and economic impact, and revisit the rules. Starcevich and Caro-del-Castillo (2012) enlarge: There are general principles that may apply to the mobile payment environment regardless of the differences in law from one country to another.
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