Mobile Commerce Insider Featured Article

May 21, 2014

Juniper Research: Mobile Wallets to be Major Part of Handset Landscape by 2018

Smartphones are available almost everywhere these days, though mobile wallet technology is much less so, a development that alternately pleases and frustrates, depending on what side of the mobile wallet reception one falls on. But mobile wallet technology may be set to catch on in a big way over the short term, according to new reports from Juniper Research, who figures that finding mobile wallet technology on a mobile handset will be a fairly safe bet.

If the Juniper Research study—titled “Mobile Wallets: Strategies for Developed and Developing Markets 2014 - 2019”—bears out, one in every five smartphones will include mobile wallet technology by the end of 2018. That may not sound like much in isolation—basically, four out of five won't have the technology on hand—but considering that at the end of 2013, one in 10 devices had the mobile wallet technology in question, it's a fairly big step forward in a comparatively short amount of time.

The gain comes from a combination of factors, starting with the growth of mobile devices in developing markets and changes to the mobile wallet concept in more developed markets. For the developing markets, the overall gain in mobile devices is helping drive this front, and gets particular help from the Stored Value Account (SVA) concept, a development that's actually bringing access to financial markets from those who've never held a bank account before. With such developments set to arrive throughout sub-Saharan Africa, developing markets in Asia and in Latin America, that's a lot of potential new market to come, and that will help drive numbers. Meanwhile, the contactless payment mechanism found in devices in developed markets like those of North America and Western Europe is set to offer some advantages as well. Apple's iWallet—still expected to arrive later this year—and the growth of host card emulation (HCE) technology backing up near field communications (NFC) technology should go a long way toward driving the trend. The Juniper Research report suggests that over a third of mobile wallets, and over half of total wallets, will boast contactless payment systems by 2018.

There are also some major developments taking place in terms of person to person (P2P) payment initiatives like those of Paym in the U.K., or Dwolla and Venmo in the U.S., in which users get another option to make payments. Financial institutions, according to the report, are particularly interested in P2P as it's a way to get more value to users in a society that turns to cash less and less often.

While mobile wallet systems—particularly at first—are going to be regarded with some suspicion, we have a comparable paradigm at hand to consider: online banking. Remember that when online banking first began the idea of actually putting such valuable financial data out there like that was an idea so ludicrous that it wasn't even worth discussing. But as the systems proved sufficiently resilient to protect users, and proved sufficiently convenient to keep the interest of said users, the end result was one in which many more users got in on the action.

There's little reason to believe that mobile payments systems won't take off in a similar fashion, but first the system needs to demonstrate its resilience and capability with the early adopters. When there are success stories—and no disasters—to cite, then larger numbers will step in. This is still an early market, but the idea that it could take off certainly isn't out of line.




Edited by Maurice Nagle




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