News

Consultancy predicts huge growth in mobile payments

February 11, 2003

LONDON -- Mobile payments revenues are set to grow to $20 billion in 2005 worldwide, according to a new report from ARC Group, a UK consultancy that produces reports on wireless technologies.

According to ARC, the figure represents an annual growth rate of more than 100 percent, and will mainly come from new types of transaction such as prepaid phone top-ups via ATMs.

Current forms of mobile payments include premium SMS messages, which can be reverse billed or charged to subscribers' accounts along with airtime, according to the ARC report. These will be followed by prepaid top-up services, either directly from linked accounts or from ATM networks.

Prepaid top-ups will be followed by virtual payments that can be used for a variety of digital
content which is purchased remotely online, according to the report. Finally, as the retail infrastructure is built out, local point-of-sale or proximity payments will begin to develop, allowing mobile users to pay for goods and services in retail outlets and at vending machines.

The newer generation of ATMs and vending machines will increasingly be able to communicate with mobile phones, according to the report, giving consumers the opportunity to access virtual cash and to build up loyalty bonus points. This will mean a repositioning of the players in the value chain, with mobile network operators partnering with credit companies and banks to offer an integrated package of content and payment facilities.

"These new payment trends are already happening in the Asia Pacific region," said Richard Jesty, lead author of the ARC report. "We're seeing vending machines that are able to talk to mobile phones and provide not just canned drinks but personalized city guides and entertainment information. Mobile ticketing projects are also underway in Japan for example which will enable travelers to use their phones as season tickets with built-in credit facilities."

In both the micro and macropayments sectors, new business models are key to growing the market for mobile services by offering alternative ways for consumers to pay easily, and for value chain players to share revenues profitably, according to the report.