Mobile Payments Are Surging to $1 Trillion: Are You Mobilize
Source: Bob Evans
Disruptive mobile technologies are shaking up traditional payment processes and mobile E-commerce is expected to exceed $1 trillion in worldwide volume by 2017, a new study says.
But another study says competing mobile platforms, including Near-Field Communications, could pose a challenge for banks and other financial institutions trying to devise the optimal mobile-tech strategies that will allow them to exploit this seismic shift to their full advantage.
So the $64,000 question―uh, let’s make that the $1,000,000,000,000 question―is this: is your company scaling up your commerce systems to keep pace with not only those enormous revenue volumes, but also the potential for competing payment tech platforms?
This imminent and massive shift will be so powerful that “such e-commerce spending on mobile devices will be the number one driver of mobile purchases,” according to a recent news story.
Here’s an excerpt from that article published on the website banktech.com:
The research in “Technology Selection: Worldwide Mobile Payments 2012-2017 Forecast” indicated that most of this purchase volume would come from mobile commerce, which includes digital media consumed on mobile devices as well as e-commerce conducted on mobile web browsers. The reported concluded that such e-commerce spending on mobile devices will be the number one driver of mobile purchases.
The IDC report said it expects that NFC will become the most-popular payment platform, followed by point-of-sale payments. In third place will be P2P (peer-to-peer) payments, the article said.
So many platforms, so much potential revenue, and so little time. What’s the strategic CIO to do?
Here’s some advice from an earlier banktech.com article headlined “P2P Payments: Why Banks Need to Dive In Now”:
P2P payments are widely seen as a natural feature for mobile banking apps, which will allow users to make P2P payments in real time anywhere they go. The service is a value-added convenience for customers, and most banks already have the security and risk management mechanisms in place to make the payments secure. With this in mind, experts say, banks would be crazy not to start offering their own peer-to-peer payments services as soon as possible to grab a slice of the P2P pie.
“The proliferation of smartphones will mean strong prospects for P2P,” predicts Jim Bailey, managing director of payment services in North America for Accenture, who is based in Atlanta. “Right now P2P is a relatively small part of the payments pie. But we expect that in the next three to five years it will increase, and there is a lot of new competition out there.”
And then there’s the NFC technology, through which mobile-payment volume is expected to increase 7X between 2012 and 2017, according to a third banktech.com article:
The report also found that 2011 was a watershed year for NFC payments, with major technology infrastructure standards finalized and NFC payment pilots from both mobile operators and financial institutions launched. Above all, according to Juniper, NFC-enabled smartphone models were announced by almost all handset manufacturers and Google ignited the market by launching its wallet in the US.
The report warned, however, that the market acceleration of 2011 revealed some parts of the ecosystem unprepared for the future. In particular, retailers are less convinced of the benefits of NFC payments over existing card technologies and are unwilling to invest in contactless infrastructure so soon after the transition to EMV cards, said Juniper.
So, one thing we can be sure of is that as unsettled as the mobile-payment sector might seem to be right now, that situation will only get more complex over the next few years on the way to that trillion-dollar mark.
In that context, it’s incumbent on CIOs to ensure that their underlying financial applications and systems are built on enduring and open standards that will give their companies the widest range of flexibility as prevailing favorites emerge in this massive business.
For example, as part of Oracle’s mobile banking strategy, the company has outlined six specific challenges, including not only this lack of a common technology standard but also these five additional issues that CIOs must resolve: security, compliance, breadth of service offerings, and a wide disparity in favored features within developing countries as opposed to developed countries.
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