Mobile wallets are coming, and while Mobile Network Operators (MNOs) will provide the majority of NFC-based mobile wallets, their market share will erode between 2012 and 2016 as Google and Apple claim loyal users. "By the end of 2012, Google will prove that Google Wallet is a hit with consumers. By 2014, we will see Google Wallets supported alongside competing MNO offerings globally," said Mark Beccue, senior analyst, mobile commerce and NFC for ABI Research. MNOs will provide 75 percent of all mobile wallets in 2012, shrinking to 63 percent in 2016.
Google Wallet will also succeed in markets where MNOs prefer not to spend capital to develop and support mobile wallet infrastructure. These MNOs will partner with Google and will benefit financially from the ventures. Apple will factor into the erosion of MNO mobile wallet market share. "Apple will launch a mobile wallet product in 2012. Apple's MNO partners will allow Apple to offer their mobile wallet to consumers who have iPhones, regardless of whether or not the MNO has a competing mobile wallet," said Beccue.
NFC-based mobile wallet users will grow to 594 million in 2016. Growth will be fuelled firstly because MNOs and OS players will flood the marketplace with NFC-capable mobile phones, particularly in the U.S., Western Europe, Japan, and Korea and secondly, because the business cases around merchant offers and interaction are compelling enough to pull mobile wallet ecosystem players in alignment. Over-the-top (OTT) mobile wallet providers (banks, payment providers, merchants) will have a difficult time establishing critical mass for their offerings, though they will find success for niche purposes. By as early as 2014, MNOs will incorporate OS and OTT mobile wallets into their umbrella mobile wallets, slowing down the growth of truly independent mobile wallets from OS and OTT providers.
ABI Research's study, Mobile Wallet Strategies, forecasts active NFC mobile wallet users, mobile couponing, and mobile loyalty/reward adoption by region and provides an analysis of mobile wallet providers.
This article was first published by our sister publication EE Times Europe.
Thanks for sharing your article about the Google Wallet. Do you think Apple will create any competition? We are blogging about this topic now. http://www.lucidagency.com/google/expect-apple-to-release-its-own-version-of-google-wallet/
Interesting that you talk about how some kind of eWallet is being used in Hong Kong nowadays. Looks like NFC will become a very common interface in the mobile phones. I see that the technological development is in a phase in which the new technologies are very focused to solve a very particular need or problem. Bluetooth is constrained to a set of use cases or applications. NFC seems to be an interest technology which uses induction to transmit and receive data and also to power up the passive devices during the transfer, but… looks like it will have very few uses other than for money transactions. Will there be some other applications? Any ideas?
People in HK has been using eWallet for over 10 years (http://hong-kong-travel.org/Octopus/). The product starts from stored-value ticket for Mass Transit Railway (aka subway, tube). It is then proliferated to train and buses. Nowadays, you can use it to pay in a convenient store and even in any fast food restaurants.
Coming back to US, I have seen Google eWallet is gaining popularity. People are paying their coffee using Google eWallet. To make payment, the consumer needs to open an application and a bar code is shown for scan. As soon as the bar code is scanned correctly, a payment is made. With the steps, I don't think merchants need to spend a lot to get the infrastructure ready. To the consumers, they have to make a couple of steps and clearly, it will be difficult to people from some age group. With the help of NFC, I believe the steps to make a payment would be a lot simpler. It might come with a cost increase to the infrastructure in the merchants' side. Nonetheless, the biggest concerns, like Dave.Dystra said, is the security. If a payment can be made easily through NFC, would someone be able to steal your money by having a device getting close to your smartphone? Not to mention, there are security concerns in the merchants equipment and the network infrastructure.
Some very interesting conjectures here. As pointed out above, there have been other great ideas that just didn't pan out, so this one looks like a wait and see. Also as pointed out above, there is a great deal yet to be done in the way of security, etc. for this to be widely accepted.
Sounds like yet another protocol that may or may not be adopted. The wireless chips in visa cards is a great example of what was supposed to be revolutionary but in the end, it cost extra money so it wasn't adopted.
The payment using the mobile will be more suitable with better payer interaction compared to the card-swiping machines used in today's world. There is no doubt that mobile phone are much smarter devices compared to the card swiping machines, what required is a better foolproof protocol, encryption and authentication standard.