Telcos Will Lead, App Providers Will Gain, in Mobile Payments

The existence of mobile wallet services operated by Google, PayPal and Isis raises an obvious question: which contestants will “win” the battle to become the dominant or leading wallet services? In principle, one might argue that over-the-top application providers, mobile service providers, clearinghouse networks such as Visa or MasterCard, banks or other payment specialists could emerge as the leading providers of such services.



Researchers at ABI Research say it is the likes of Google and Apple that ultimately will lead the market, though mobile service providers are highly likely to claim the most share initially.



While mobile service providers will havethe majority of NFC-based mobile wallet users early on, their market share will erode between 2012 and 2016 as Google and Apple assume greater share.

“By the end of 2012, Google will prove that Google Wallet is a hit with consumers,” says Mark Beccue, ABI Research senior analyst. “By 2014, we will see Google Wallets supported alongside competing MNO offerings globally.”



Mobile service providers might have 75 percent mobile wallet share in 2012, shrinking to 63 percent in 2016.  Over the top providers will win wallet war


Google Wallet also will succeed in markets where mobile service providers prefer not to spend capital to develop and support mobile wallet infrastructure. In such cases, application providers such as Google, Apple and others will have an advantage.



Though Apple is not yet in the market, ABI Research believes Apple will enter the market. “Apple will launch a mobile wallet product in 2012,” Beccue argues.



ABI Research also predicts that near field communications will support 594 million users in 2016.

That is not to say banks, payment providers or merchants will fail to attempt their own offerings. Starbucks, for example, operates one of the most-successful mobile wallet and payment programs in 2011.



In most cases, such efforts will have suffered in the face of successful programs offered by the likes of Google, Apple and the mobile service providers, ABI Research believes. Who wins wallet war?



Apple has yet to launch a mobile payment service, though it is widely believed from patents and whispers in the corners of the industry that the company will equip its iPhones with payment-enabling NFC sensors and software in 2012.



As with Google and its carrier partners, AT&T and Verizon will allow Apple to offer its mobile wallet to consumers who have iPhones, regardless of whether or not the carrier has a competing mobile wallet, Beccue noted.



Still, most observers believe PayPal says 2016 will be the year when some industry executives believe U.K. shoppers will be able to use their mobile phones to shop, instead of using cash, checks or credit and debit cards.



PayPal’s conclusions are based on a Forrester Consulting survey of 10 senior executives from major U.K. retailers and other businesses.



Some 49 percent of mobile buyers surveyed by Forrester Consulting use their mobile phones to purchase products at least once every three months.



“By 2016, you’ll be able to leave your wallet at home and use your mobile as the 21st century digital wallet,” says Carl Scheible, Managing Director of PayPal UK.



“We’re not saying cash will disappear entirely, but we’ll increasingly use our phones and other devices rather than our wallets to pay in-store as well as online,” argues Scheible. 2016 key for U.K. mobile payments


Some might even argue  that mobile wallet functions will have more substantial impact on the retail shopping experience, however. “Payment” using a mobile device might be the least-important new reason people use new mobile commerce applications.



In fact, some might argue, consumers will be using mobile payment apps because the value of the mobile wallet offers clear value.



“PayPal’s vision is a one-stop shop for retailers to engage their customers directly during every part of the shopping lifecycle, generating demand from consumers through location-based offers, making payments accessible from any device, not just from the mobile phone, and offering more flexibility to customers even after they’ve checked out,” Scheible says.



“As well as paying for goods without having to queue, the report reveals shoppers can look forward to being able to carry digital loyalty cards, promotional offers and receipts on their phones – keeping everything in one place creating a virtual shopping hub,” PayPal says.