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Mobile Payments in Asia Pacific to rise to $316 billion in 2014, a CAGR of 94.1%

Mobile Payment Transaction Values in Asia Pacific to reach $316 billion in 2014

• Asia Pacific will see strong growth, both in terms of transaction values and user cases. We expect that in 2014, there will be 622 million mobile payments users in the Asia Pacific region with over 62 billion user cases.
• Gross Value of Transactions in Asia Pacific will reach $316 billion in 2014 for a CAGR of 94.1%.
• The market is quite diverse in terms of what is transacted. Although prepaid top-ups will continue to be the largest category, we expect that its share of total transactions (in terms of transaction value) will decline from 40% in 2009 to 25% in 2014.
• Money transfer is another large mobile payment category in the Asia Pacific due to the large number of migrant workers both within countries and internationally (such as China, India, Philippines, Pakistan, Bangladesh, etc.)

Global Mobile Payments transactions to rise to $1.13 trillion in 2014, a CAGR of 94.8%

Mobile payments continued its stellar growth in 2009 with the total number of users increasing to 351.4 million

• Globally, we are expecting the number of mobile payment users to rise to 1.06 billion in 2014 for a CAGR of 20.5%.
• On the transaction value side, the gross value of mobile payments transactions was $37.4 billion in 2009. We expect mainstream take-up of mobile payments to happen in the 2011 – 2013 time frame. Our forecast is that in 2014, the gross value of mobile payment transactions will reach $1.13 trillion.

SMS accounted for 76.4% of mobile payment transactions in 2009. This is expected to decline to 58.7% in 2014

Ease of use, ubiquity, and minimal network investments means that SMS will continue to be the transaction technology of choice for mobile operators and users

• Globally, SMS will continue to dominate how customers pay with their mobile devices. Three-quarters of all mobile payments happened through SMS in 2009. We expect the relative share of SMS mobile transactions to decline to 58.7% in 2014.
• SMS is the most often used technology because of its ease of use and ubiquity. The major advantage of SMS is that it does not require investments in mobile networks or user devices and can be implemented in a short period of time.

NFC accounted for 14.9% of mobile payment transactions in 2009. This is expected to increase to 32.8% in 2014

NFC to see take-up in Western Europe and North America with volume shipments of NFC phones in 2011 and contactless infrastructure deployments in the 2009 – 2011 period

• In 2009, there were 861 million NFC transactions globally. We expect this to rise to 35.6 billion transactions in 2014, for a CAGR of 106.4%.
• The key constraint to NFC take-up is the lack of NFC phones and contactless infrastructure outside of key markets such asJapan. We expect NFC phones to appear in volume shipments in 2011. We also expect initial NFC transactions to be centered around public transportation and other ticketing POS transactions.
• While the NFC Forum has selected the single-wire protocol as the phone standard for communication between the NFC chip and the SIM card, we think that, as in all things mobile, there will be fragmentation in standards, depending on the business requirement. This is likely to slow down the take-up of NFC in different markets.

WAP / Browser-based payments and USSD will see only limited use in the next five years

Relative share of WAP / Browser-based payments and USSD to remain the same at about 6% and 2.5%, respectively

• Browser-based payments using WAP, HTML or XML saw increasing volumes in 2009. While we expect usage of these technologies to rise at a faster pace than SMS (their CAGR in terms of volumes is 80.6%), there are a number of key constraints impeding better adoption of these technologies.
• From our Global Consumer Telecommunications Survey, we find that many users still perceive mobile internet as more expensive and are concerned about data charges. Also, in our view, the user interface when migrating on-line payment models onto mobile devices does not work very well.
• For USSD, because it uses the signaling channel of GSM networks, our interviews with operators suggest that they either will have to increase network capacity or dimension the network when transaction volumes reach system limits. Another constraint of USSD is weak data encryption capability.

Merchandise Purchases using Mobile Payments to reach $224.4 billion in 2014 for a CAGR of 95.7%

Merchandise purchases using mobile payments were $7.4 billion in 2009

• IEMR’s user surveys show that the average transaction value of merchandise purchases globally was about $12.84 per transactions with 576 million transactions for physical goods happening in 2009. We expect the gross value of merchandise purchases using mobile payments to reach $224.4 billion in 2014 with average transactions reaching $17.43, as consumers develop a comfort level for mobile transactions.
• In our view, the key impediment to merchandise purchases (physical goods) is that it requires an extensive merchant network with pre-registration of the user’s bank accounts or credit cards with the “made for mobile” service. That is why we think that merchandise purchase growth will closely track overall growth in mobile payments globally.

Prepaid Top-ups using Mobile Payments to reach $286.4 billion in 2014 for a CAGR of 76.7%

Prepaid Top-ups will see traction over the next five years

• IEMR’s user surveys suggest that top-ups for prepaid services such as mobile, fixed line, internet/broadband services and top-ups for other services such as gaming, utility payments, or gift cards will be extremely popular with consumers globally.
• While the gross value of prepaid top-ups in 2009 was only $15 billion, we expect strong growth for this segment with gross value of total transactions to reach $286.4 billion in 2014.
• We think that prepaid top-ups will be extremely popular in developing markets because they allow for small-denominated and frequent transactions that fit the needs of cash-starved societies.
• We also think that prepaid top-ups benefit mobile operators since top-up transactions help them lower distribution costs (they do not need to go to a store to purchase a top-up).

Mobile Money Transfers to reach $148.5 billion in 2014

Mobile Money Transfers to reach $148.5 billion in 2014 for a CAGR of 86.2%

• There has been much talk about how money transfers are going to change the future of mobile payments with a great degree of variation among analyst firms and industry associations of the size of this segment of the market.
• IEMR’s user surveys suggest that there is still some reluctance among consumers to use mobile devices to engage in MMT-type transactions. In our view, most MMT-type transactions are not going to be Mobile-To-Mobile transactions, but rather Mobile-to-Cash transactions which will still require physical agents and banks to deliver the cash. Also, typical recipients of cash are older parents and relatives of senders both for domestic and international P2P transactions.
• While adoption will continue to be strong over the next five years, we see considerable variation in different markets. In our view, markets where operators are at the centre of the ecosystem (such as China) will likely see a faster take up than markets where banks are running the mobile payment platforms.