Slower-than-expected adoption of Near Field Communications (NFC) technology has led Gartner to lower its forecast for mobile payment transactions in the next several years. The research firm projects the total value of mobile payments globally will rise 44% this year to $235.4 billion, from $163.1 billion last year.
The
number of mobile payment users will reach 245.2 million, up from 200.8 million in 2012.
A year ago, however, Gartner predicted mobile payments would reach $171.5 billion, with 212.2 million
users. As a result, the projected 42% annual growth rate for transactions from 2011 to 2016 that it made last year has been revised to 35% through 2017.
“We expect global mobile
transaction volume and value to average 35% annual growth between 2012 and 2017, and we are forecasting a market worth $721 billion with more than 450 million users by 2017," said Sandy Shen, research
director at Gartner. "Nevertheless, we have lowered the forecast of total transaction value for the forecast period, due to lower-than-expected growth in 2012, especially in North America and
Africa."
Furthermore, the firm said NFC-based transaction value has been cut by more than 40% for the forecast period, given disappointing adoption in all markets amid the struggles of
high-profile initiatives like Google Wallet and the carrier-backed Isis venture to gain traction. NFC will account for only about 2% of total transaction value this year and 5% in 2017. Growth will
pick up somewhat in 2016, with increasing penetration of NFC-enabled phones and contactless readers in stores.
Money transfers and retail purchases will account for about 71% and 21% of total
transaction value in 2013, respectively, making them the largest contributors. But Gartner points out that people are not purchasing more because the buying experience in mobile has yet to be
optimized. People are spending less via mobile than online or in stores. By 2017, purchases will still only account for 23% of the forecast transaction value of $721 billion.
The total of
mobile money transfers will continue to climb through wider availability of services and transaction costs that are lower than traditional banks. The transaction value of bill payments will grow 44%
this year and will remain high in the coming years as those in developed markets pay their bills on mobile devices. Still, bill payments will account for just 5% of overall mobile payments by
2017.
Regionally, North America's transaction value is expected to grow 53% in 2013, to $37 billion -- up from $24 billion last year. Even so, the region has been affected by low adoption of
NFC payment services. Many merchants are launching mobile apps “in a copycat fashion without a clear winning strategy,” according to Gartner.
Elsewhere, the Asia-Pacific market is
projected to see 38% growth in transaction volume to $74 billion this year, while Western Europe will jump to $29 billion from $19 billion in 2012. Africa’s mobile payments total is forecast to
hit $160 billion in 2016.