Friday, May 14, 2010

Mobile Payments to Reach $633 Billion by 2014 ... Believe it or Not?

The worldwide market for mobile payments will grow to $633.4 billion by 2014, up from $68.7 billion in 2009, according to a new report by Generator Research. Meanwhile, mobile payment users will grow 600 percent, to 490 million in 2014 from 81.3 million last year. Using your phone or your phone number to exchange money is convenient for everyone but especially the “underbanked.” Whether it’s payment dongle Square launching this week, Zong raising $15 million late last month on the strength of its virtual goods business on Facebook, or the fact that my dinner party companions last night settled the bill using Venmo, mobile payments are finally part of the present rather than the hazy projected future.

According to Kolja Reiss, managing director of Mopay U.S. Mopay has been in this business, so to speak, since 2000, but mobile payments were tiny until 2007, Reiss said. He said the next big thing in mobile payments will be a major reduction in carrier fees. Right now mobile carriers take an exorbitant 40-50 percent portion of transactions. That’s the convenience fee for tacking on a receipt to a customer’s phone bill, payable at the end of the month (and that delay can be a problem on its own). But carriers are coming to their senses, Reiss claimed. They realize that growing the market for mobile payments will help them more than wiping it out with huge fees. Reiss said to expect major reductions in carrier fees around the world within the next 18 months.