Despite the hype, mobile payments are still rare and likely to remain so over the next ten years, at least in the developed world. It appears that the market leaders, in particular large banks, have little incentive to invest in alternative payments.
Taking into account current knowledge of market drivers, the global value of mobile payments will triple from $311 billion in 2013 to $1.1 trillion in 2017, representing a rise from less than 1% to 3% of the world card payments.
While e-commerce has become mainstream, most online purchases are still card based.
So, who are the winners and who are the losers in the global payments market?
Well, this is not quite clear yet. Many of the large banks are likely to retain their strong position in the coming years. Visa and MasterCard will benefit from their brand recognition and are likely to dominate the cross-border consumer payments. Many agree that in addition to the two large networks there is a realistic chance for one or two other big international players, such as Google, Apple or PayPal, to gain prominence in the international space.
The domestic payments space is far more disruptive. Leading banks, often advised and influenced by the two networks, are starting to realise that they can considerably benefit from alternative payment solutions, through operational efficiency and customer relationship management (CRM).
Who’s losing the game?
There’s even less certainty here. It appears that Telcos have so far missed the opportunity to play a more significant role in the payments space. In an environment in which mPOS is starting to play a significant role at the point of sale, some industry insiders point to providers of hardware solutions at the point of sale. But these players are also moving aggressively to provide added value solutions to merchants/acquirers, and they are also looking to rely on access to big data.
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This post was written by Vladimir Vukicevic, Head of Cards and Payments Intelligence Centre at Timetric.
Definitions: ‘Mobile payments’ is defined as payments made for purchase of goods or services using mobile devices such as mobile phones.
Timetric is a leading provider of online data, analysis and advisory services on key financial and industry sectors. It provides integrated information services covering risk assessments, forecasts, industry analysis, market intelligence, news and comment.