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Mobile Commerce Transactions will Exceed $3.2 Trillion by 2017

Mobile Commerce Insider Featured Article

June 19, 2013

Mobile Commerce Transactions will Exceed $3.2 Trillion by 2017

By Tony Rizzo
TMCnet Senior Editor

A new Juniper Research (News - Alert) report is now available that anticipates mobile commerce transactions more than doubling over the next four years. Juniper pegs the current market at roughly $1.5 trillion for 2013, and its new research strongly suggests that the value of mobile commerce transactions will rise to $3.2 trillion by the end of 2017 - a significant leap forward.

The report, “Mobile Commerce Markets: Sector-by-Sector Trend Analysis & Forecasts 2013-2017,” clearly underscores that mobile devices are in fact taking over - consumers at every level, whether sophisticated mobile and tech users or not, are finding it quite frictionless to make the transition to mobile-based transactions, bill paying and financial account management. At its core, it is really that simple.

Of course there is the associated and inexorable trend of smartphones taking over the landscape. With 53 percent (according to IDC (News - Alert) research) of all shipping mobile phones now being smartphones, it becomes increasingly easy for a much larger mobile population to deal with mobile transactions. Mobile transactions through smartphones are far easier to do than with feature phones.

The Juniper report also finds that the banking sector in particular has done a stellar job of convincing its customers to use their mobile devices. This growing popularity for using mobile devices for bill payment is reflected in the fact that the mobile banking sector currently accounts for the lion’s share of transaction values over the next five years.

The report also makes clear that while $3.2 trillion sounds like a lot of money, in reality it isn't. Juniper notes that "to put global mobile commerce into context, total financial transactions in the U.S. alone exceeded $4,400 trillion in 2012." Mobility is but a tiny fraction of the transaction totals, but all that means is that there is and will be huge upside ongoing for growth for many years to come.

That said, the report also notes that there are a number of hurdles that need to be overcome for mobile commerce to deliver on the potential highlighted above in the coming years. Dr. Windsor Holden, the report's author, says, “A significant minority of retailers have yet to optimize their sites for mobile usage. Unless and until retailers themselves can ensure a seamless, user-friendly mobile shopping experience, they will fall behind competitors who are already using mobile channels to enhance customer relationships.” Indeed, the laggards will fail, and this failure will result in unrealized mobile gains.

Finally, as we would fully expect to still be the case, the report highlights that lengthy Point Of Sale infrastructure replacement lifecycles continue to hamper NFC deployments in both the retail and transport sectors, with players understandably reluctant to upgrade infrastructure without a demonstrable return on investment.

Is this still a chicken and egg issue? Though Apple (News - Alert) is yet to get on the NFC bandwagon with the iPhone (and all indications are that the next iPhone won't support NFC either) most of the other significant players - including Samsung and Nokia (News - Alert) - are well on board with NFC use not only for mobile transactions but for other near field communications uses as well (Samsung's "bump to share" for example). We believe the phones are finally in place - but retailers still need to get on board with NFC - they should.

Our opinion and recommendation is that retailers sitting on their hands waiting for proof of ROI will be left in the dust by NFC pioneers. The banks have certainly not been sitting on their hands - which is why mobile commerce has progressed on that front. Retailers urgently need to step up their mobile games.

The Industries and Global Regions That Lead Mobile Commerce

Juniper notes that a number of key industries are critical for mobile commerce growth. These include retail, the airlines and of course the financial institutions. Each of these industries (with them exception noted above on NFC in retail) are actively driving the importance of the mobile channel as an engagement, delivery and payment mechanism. The report also underscores the activities of Visa and MasterCard (News - Alert) with regard to NFC certification and the airline industry’s rapidly growing electronic ticketing initiatives as key developments in this regard.

The report also takes note of the fact that the introduction of mobile wallet services in many emerging markets now provides greatly improved financial access where the proportion of "unbanked adults exceeded 50 percent," as the report puts it. In these emerging markets it cannot be understated as to how important and critical growing partnerships between storefronts and wireless network operators, who enable payments via carrier billing, are to enabling greater access to the digital economy in these emerging markets.

The chart below shows how Juniper anticipates mobile commerce will evolve on a global regional basis through 2017. There are no surprises here, but it is interesting to note that the majority of Asia is fully on track to become the largest mobile commerce region over time.

Juniper provides a free downloadable whitepaper, Mobile Money Means Business, directly through its website. The full report is available for purchase together with further details of the report from the website as well.

Edited by Alisen Downey

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