This article describes research from IDC that predicts a worldwide mobile payment volume of US $1 Trillion driven primarily by Asia pacific countries:
“The Asia Pacific region, including Australia, is predicted to contribute greatly to the rise of 124% as mobile commerce (or mCommerce) transactions with remote payments take off across the region.”
The research was heavily slanted to understanding geographical differences but fails to identify what specific mobile payment use cases were included or excluded. This is the same problem Mercator faced in 2004 regarding the prepaid market. To resolve the problem Mercator created a taxonomy that drove its market size research by identifying the 26 specific use cases of prepaid that were included in the count. Today, Mercator measures and forecasts mobile payments for three specific use cases including mobile in-store prepaid, mobile open loop NFC, and mobile browser / mobile app payments.
The geographic variations in mobile payment adoption were categorized in this research effort:
“ ‘When we look across the region, we see a duality between the mature Asian markets like Australia, Hong Kong and Singapore versus the emerging Asian economies like China, India and Indonesia. The mature markets exhibit strong levels of banking and card adoption and will tread a similar path as mature Western economies have for mobile payments, with a focus on proximity solutions based on Near Field Communications (NFC). These will be fertile markets for solutions like Apple Pay and Android Pay.’
IDC says, however, that Asia’s emerging markets, which accounts for most of Asia’s population, are unlikely to follow this path, and will more likely leverage on semi-closed wallets, where consumers ‘top-up’ their mobile wallets much like they would a prepaid mobile account by linking their bank accounts.
According to Michael Yeo, Senior Analyst, IDC Retail Insights, “The markets of Asia Pacific are highly diverse and each displays significantly different characteristics as relates to their ultimate potential for mobile payments.”
IDC says it has been able to identify common characteristics and group these countries into three ‘clusters’ – card payment leaders, mobile payment leaders and mobile money leaders- reporting that the mature Asian economies will remain card payment leaders and view mobile payments as an efficiency driver with proximity solutions seeking to displace the need for physical swiping of cards.
The remaining Asian markets, says IDC, will look at mobile payments as a GDP booster and to address financial inclusion imperatives, and mobile payments in these markets will jumpstart mCommerce much like Alibaba has in China.
While the research did break out some use cases, it was limited to open loop NFC and wallets based on semi-closed platforms:
Looking at the forward market, IDC says it has identified several opportunities for sustained growth in mobile payments across Asia Pacific excluding Japan:
• NFC-based proximity solutions such as Apple Pay and Android Pay will only take hold in a few mature Asian markets as their adoption is constrained by the low penetration of NFC in smartphones and readers in Emerging Asia
• Mobile wallets, especially those based on semi-closed platforms, will drive much of the growth from Emerging Asian markets. Then, there will also be a significant opportunity for mobile point of sale (mPOS) device and solution vendors seeking to address gaps in card present (CP) payment scenarios in physical locations, which requires payments to be verified either by NFC or even quick response (QR) codes.”
Mercator’s forecast to 2020 projects a total of $169 billion in total mobile payments for the US market in 2017 which is a total of the in-store prepaid, open loop NFC, and mobile browser / mobile app payment use cases.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
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