Mobile Payment Users Up 70.4% Over Last Year, Says Gartner

The mobile payment industry will experience steady
growth, as the number of mobile payment users worldwide will total 73.4
million in 2009, up 70.4 percent from 2008 when there were 43.1 million
users, according to Gartner, Inc.

Gartner predicts that the number of mobile payment
users will reach more than 190 million in 2012, representing more than
3 percent of total mobile users worldwide and attaining a level at
which it will be considered "mainstream."

The mobile payment industry will experience steady
growth, as the number of mobile payment users worldwide will total 73.4
million in 2009, up 70.4 percent from 2008 when there were 43.1 million
users, according to Gartner, Inc.

Gartner predicts that the number of mobile payment
users will reach more than 190 million in 2012, representing more than
3 percent of total mobile users worldwide and attaining a level at
which it will be considered "mainstream."

Momentum in the mobile payment market gathered further
in 2008 with a number of high-profile launches of mobile money transfer
services in multiple markets, participation of major global
institutions in near-field communication (NFC) payment trials, as well
as new payment solutions entering the market," said Sandy Shen,
research director at Gartner. "However, at the same time, security
concerns, an inadequate 'ecosystem' and undefined areas in banking
regulations remain challenges for mobile payment."

Gartner defines a mobile payment as paying for a
product or service using mobile technology such as a short message
service (SMS), Wireless Application Protocol (WAP), Unstructured
Supplementary Service Data (USSD) and NFC. It includes transactions
that use banking instruments such as cash, bank accounts or debit and
credit cards, as well as noncarrier stored value accounts, such as
travel cards, gift cards or Paypal. It does not include transactions
that use mobile operators' billing systems, such as purchase of mobile
content or telebanking by mobile to the service center via an
interactive voice response (IVR) system.

"Mobile payment has very different user cases and
impact on developing markets to that of developed markets," Ms. Shen
said. "In developing markets, together with mobile banking, it allows
people to use financial services in a more-efficient way -- and
sometimes the only way -- at more-affordable costs, and can greatly
improve standards of living. In developed markets, mobile is more of an
extension of the existing payment infrastructure that allows people to
deal with their financial needs on the go and in a timely fashion."

This disparity leads to the presence of different
products in different markets. For example, many services in the U.S.
rely on a full browser and credit card, but this won't work in
developing markets, as many people don't even have a bank account or
bank card. On the other hand, Ms. Shen said USSD banking wouldn't be
acceptable in the U.S. as mobile operators have never made use of this
for customer services and users may find it very awkward to work with.

In terms of both number of users and transaction
volumes, Gartner expects Asia/Pacific and Japan to maintain a larger
share of the market through 2012. While mobile payment penetration in
Western Europe is expected to rise from 0.9 percent in 2009 to 2.5
percent in 2012, and from 1.7 percent to 3 percent in North America;
penetration in Asia/Pacific and Japan will rise from 2 percent in 2009
to 3.8 percent in 2012. Mobile payment penetration in Eastern Europe,
the Middle East and Africa (EMEA) and Latin America is also expected to
exceed 3 percent by 2012.

"The most profound impact of mobile banking and payment
services is that they provide the nonbanking population with access to
modern financial services, giving them tools to improve their living
standards," said Ms. Shen. "For mobile operators, mobile payment can
help attract and retain users and generate new revenue streams. For
financial institutions, mobile payment is an opportunity to reach users
who may have been previously unreachable, due to a lack of retail
infrastructure."

Ms. Shen said that overall, the market will see
fragmentation in both technologies and business models, meaning that
services need to be adapted for individual markets -- even when deployed
with the same partners -- and that long lead times will be needed for
deployment. This, together with the time required for creating user
awareness, leads Gartner to believe that mobile payment is at least
three years away from entering the mainstream market.

Additional information is available in the Gartner
report "Dataquest Insight: Mobile Payment, 2007-2012." The report is
available on Gartner's Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=950812&subref=simplesearch#h30.