Mobile payment uptake to soar

People making payments via mobile devices will exceed 100 million by 2011, says analyst

Payments made via mobile will become increasingly popular

The number of people making payments via mobile phones will rise from 32.9 million in 2008 to 103.9 million in 2011, according to latest research from analyst Gartner.

According to the report, services based on wireless application protocol (WAP), unstructured supplementary service data (USSD) and near-field communications (NFC) contactless services will become increasingly popular in the next few years, although SMS text messages will remain as the main channel for m-payments.

Although levels of investment in the financial sector are predicted to drop in light of the current economic conditions, investment in mobile payments might help boost revenue.

"Banks can justify the investment if they look at mobile as an extension of their existing channels and bundle payments with additional banking services," says Gartner research director Sandy Shen.

A separate study by consultancy Oliver Wyman polled 30 companies in the advanced payments industry and found that most respondents expected to see strong growth for payments made via alternative means.

Factors driving the fast development of the sector include the increasing sophistication and cost effectiveness of the technology involved, said the survey.

“To a certain extent it is land grab time,” said Oliver Wyman’s senior partner Zilvinas Bareisis.

“But players in the industry will need a sophisticated strategic marketing capability, a workable business model and clear approaches to interoperability,” he said.

“The winners will be those who can break out of their segments and constraints.”

Last December, Barclaycard was the first to launch a large-scale NFC pilot in the UK, in partnership with Transport for London.

The six-month trial, which also involves suppliers Nokia and O2, uses 500 mobile handsets incorporating Oyster smartcard technology.