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Earlier this year, payment service provider Mopay predicted substantial growth in the mobile payment industry. In other words, they felt that payments would be made increasingly via mobile phones as opposed to traditional payment options. The payments would be based on Near Field Communication (NFC) chips in mobile phones that can read and process credit card information. They predicted that 2011 would be a breakthrough year in this field. How has it panned out thus far?
Growth has not met the original expectations. Growth in developing markets is of particular note, as it has not lived up to the hype. While conditions are favorable for mobile payment in such markets, many service providers have not adapted to localized mobile payment processing. Essentially, consumers in these markets are not yet able to routinely pay for items at the checkout counter with their mobile phones, as the service providers have not adapted to local payment processing needs.
Current Outlook For Mobile Payments
Despite not reaching it’s expected growth level thus far, the mobile payment processing industry has had significant growth. It is expected that there will be 141.1 million mobile payment users by the end of 2011. The total payments via mobile phones this year is expected to be $86.1 billion, which is $37.2 billion (76%) higher than the $48.9 billion that was spent in 2010.
Future Outlook For Mobile Payments
For the next few years, research firm Gartner expects SMS (text messaging) and Unstructured Supplementary Service Data (USSD) to dominate the mobile payment processing industry in developing countries. In developed countries, Gartner expects Wireless Application Protocol (WAP) technology to dominate the mobile payment processing industry.
Ultimately, according to Gartner, mass adoption of mobile phone payments is at least 4 years away. So, despite the significant growth in the industry in 2011, it will probably not turn out to be the breakthrough year that was originally predicted. That being said, a 76 percent increase in total payment amount via mobile phones over 1 year is no small feat. Thus, while this is not the breakthrough year that was anticipated, it looks like mobile phone payments are still growing rapidly and will play an increasing role in the payment processing world for quite some time.