M-Payments To Reach $90B By 2017
A new Forrester report projects U.S.
mobile payments will rise steeply in the coming years, propelled mainly by in-store mobile transactions. The research firm forecasts 48% annual growth in m-payments from $18.2 billion this year to $90
billion in 2017.
A separate Forrester study focused on U.S. mobile retail sales estimates that m-commerce will increase from $12 billion in 2013 to $31 billion in 2017, but remain a small part of overall e-commerce dollars.
Neither report includes tablet-based purchases within the scope of mobile payments or m-commerce.
Forrester breaks its mobile payments forecast into three parts: 1) mobile proximity, or in-store, payments; 2) mobile peer-to-peer (P2P) and remittances; and 3) mobile remote commerce, or m-commerce. Proximity payments are expected to be the fastest-growing segment, increasing 137% to $41 billion by 2017. In that time, it will shoot up from just 6% of mobile payments to 45%, while m-commerce drops from about 90% to 50%.
The biggest jump for proximity payments is expected to come in 2014 as early adopters begin to try one or more m-payment solutions, pushing retailers to provide a better alternative to swiping a card or paying cash.
The firm also predicts that retailers will ramp up adoption of Near Field Communication (NFC) technology to modernize point-of-sale systems. To date, NFC-based payment offerings like Google Wallet have not gotten much traction, in part because of a lack of supporting technology at the store level.
P2P mobile payments are not projected to grow nearly as fast, at a still healthy 43% clip to $4.2 billion by 2017. Forrester analyst Denee Carrington points to a lack of ROI in P2P payments services, a largely untapped international market, and limited use of mobile bill-payment to date as factors slowing the growth of mobile remittances.
As the most mature m-payments segment today, m-commerce will have the lowest growth rate in the next five years, increasing 31% to $45 billion. The report maintains mobile shopping will pick up when the checkout process becomes easier, consumers overcome security concerns in mobile transactions and m-commerce is better integrated with other shopping channels.
A separate report by Forrester analyst Sucharita Mulpuru released Wednesday that focuses just on m-commerce points out similar hurdles in the space. (The projection of $31 billion is lower than the $45 billion in the m-payments report because it excludes travel purchases.)
Other research has shown that much m-commerce is taking place on tablets rather than smartphones. An eMarketer forecast last week estimated tablet transactions accounted for more than half (57%) of the nearly $25 billion in U.S. m-commerce last year, with that proportion expected to grow to 62.5% this year. Forrester doesn’t include tablet-based sales in its own m-commerce figures.
But given the size limitations of smartphone screens, Mulpuru suggests retailers consider shifting their focus to tablets. “Companies are likely to find that dollar for dollar, investing in innovative tablet solutions may be more worthwhile than investing in smartphone solutions, especially as sales via tablet continue to eclipse sales via mobile phones,” she wrote.
Forrester estimates that only 3% of all e-commerce transactions last year took place on mobile phones, with even that figure likely skewed by higher sales on Amazon’s and eBay’s mobile properties.
"Mobile Payments photo from Shutterstock"