According to a new research report from Berg Insight, in-store mobile wallet payments in EU27+2 is forecasted to grow from less than €0.1 billion in 2012 at a compound annual growth rate of 275% to reach €45 billion in 2017. This will correspond to 1.6% of the credit card and debit card payments at the end of the forecast period.
Many new projects are now being initiated and by the end of 2013 there will be mobile wallet services commercially live in nearly half of the EU27+2 countries. The companies behind these wallet services include many of Europe’s largest mobile operators, banks and retailers such as T-Mobile, Orange, Telefónica, BNP Paribas, Barclays and Auchan.
In North America, mobile wallet users completed in-store payments for a total of $0.5 billion (€0.4 billion) during 2012. However, the vast majority of these payments were made using Starbucks’ phenomenally successful smartphone app, whereas mobile wallets that can be used at multiple merchants have yet to gain traction. In the longer term, universal mobile wallets such as those provided by Isis, Google and MCX will drive the majority of the mobile in-store purchase volume, which is expected to reach $44 billion (€33 billion) by 2017.
The required infrastructure for mobile wallet services is being rolled out and key partnerships are being formed between mobile network operators, financial institutions, retailers and other companies. However, before mobile wallets can attract the mass market, a broad range of services beyond payments need to be made available to consumers.
“People do not have a problem with cash or payment cards today. Value-added services that enable new shopping experiences before, during and after payments will be what truly distinguish mobile wallets from the traditional payment instruments,” comments Lars Kurkinen, telecom analyst, Berg Insight. He adds that the next few years will be a very important time during which mobile wallet operators have an opportunity to improve their services.
“Gaining an early lead in the market can be crucial, as in the long term only a limited number of mobile wallet services will survive in each market due to network effects,” he concludes.
There were NFC mobile wallet services commercially live in 13 countries worldwide at the end of Q1-2013, up from just 6 countries at the end of 2011. However, these services are still available to a very small number of consumers.
“With the exception of a few projects in Asia-Pacific, there are only 3 NFC mobile wallet services in the world that have an effective addressable market of more than 100,000 people. These three services are Google Wallet and Isis in the US and Turkcell Wallet in Turkey,” continues Kurkinen. However, this will change substantially during the next few years due to the massive rollouts of NFC-enabled phones, NFC-ready POS terminals and TSM solutions.
The market for NFC-enabled mobile phones reached a breakthrough in late 2011 and accelerated further in 2012 as new NFC handsets were introduced by all leading handset vendors except Apple. Berg Insight estimates that total NFC handset sales grew 300% to 140 million units worldwide in 2012. The global installed base of NFC-enabled handsets reached 170 million units in 2012, which corresponds to approximately 3.3% of all mobile handsets in use.
Between 2012 and 2017, the installed base of NFC-enabled handsets is forecasted to grow at a CAGR of 65% to reach 2.1 billion units at the end of the forecast period. The penetration rate for NFC across all handset segments will similarly increase to approximately 32% by 2017.
Global shipments of NFC-ready POS terminals doubled to an estimated 3.9 million units in 2012. Major vendors such as VeriFone and Ingenico are already now including NFC as a standard feature in almost all new products. Berg Insight forecasts that the global installed base of NFC-ready POS terminals will grow at a CAGR of 46.1% from 6.7 million units in 2012 to 44.6 million units by 2017.
The penetration rate of NFC-ready POS terminals is projected to be an estimated 87% in EU27+2 by the end of 2017. The penetration rate in North America and Latin America will be 82% and 68 % in the same year respectively, whereas penetration in the Rest of World will reach 39%.
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