IDC forecasts rapid growth in near-field communication payments
Worldwide business and consumer spending over mobile devices is predicted to exceed $1 trillion by 2017, according to the latest research from IDC.
IDC forecasts rapid growth in near-field communication payments, driven by mobile handset and point-of-sale terminal upgrades. Proximity payments are expected to become the second-largest category of mobile payments spending.
Most of the dollar volume will be in the form of e-commerce spending over mobile devices, which includes digital media consumed on the device, as well as e-commerce through a mobile web browser, IDC noted.
The mobile point-to-point transfer of funds is not expected to grow as fast as the other areas, due to a lack of common standards for sending money across borders using mobile devices, as well as a lack of locations for adding and withdrawing cash from the system.
"The growing prevalence of smartphones is enabling a variety of mobile payment methods, which combined are becoming a significant share of global commerce. We expect growth rates to continue to accelerate as consumers and retailers become more comfortable with the technology," commented Aaron McPherson, practice director for worldwide payment strategies at IDC Financial Insights.
The outlook for financial institutions is good because most of the mobile payments volume will be driven by traditional card products. IDC said that financial institutions should view mobile payments as an opportunity to leverage the information they possess on their customers' shopping habits and demographic characteristics.
IDC recommends that financial institutions implement targeted marketing and reward programs as a supplement to their loyalty programs, as customer loyalty will go to the company that provides the best value in the form of savings and information. Financial institutions should also facilitate the incorporation of their cards into NFC and mobile wallets, to capitalize on the growth of proximity payments.
The IDC forecast looks at business and consumer spending over mobile networks from 2012 to 2017 and includes purchases of digital and physical products and services, as well as direct fund transfers where no product or service is exchanged. It assumes that most mobile payments actually substitute for existing payment methods.
The research firm cautioned that there are uncertainties in the forecast, depending on whether financial institutions, mobile telecommunications operators, and retailers can agree on common standards for payments. If each sector insists on going its own way, mobile payments growth will underperform the forecast, IDC said. If the market consolidates into a few dominant schemes for each country, then mobile payments could be much larger, it concluded.
- see IDC's data