Forrester is predicting big growth for the mobile payments market in a new report out today, spanning 2013 to 2017. The market research firm is anticipating that the U.S. mobile payment market will see $90 billion spent in 2017, an incredible 48 percent compounded annual growth rate over the $12.8 billion that was spent in 2012.
This is pretty much in keeping with other predictions we’ve been seeing, like the $110 billion in transactions anticipated by Juniper Research across not only the U.S., but also the rest of North America and the Western European markets, or the $191 billion annual figure for 2017 predicted by ABI Research for global NFC-based mobile payments made in October of last year. Despite the fact that Apple still doesn’t include NFC in its flagship smartphone, growth in mobile payments seems inevitable driven by other delivery vectors and OEMs who are embracing NFC and selling lots of hardware, like Samsung.
As for Forrester, it sees growth in mobile payments driven by proximity payments, which, while currently the smallest subcategory of mobile payments according to the research firm, should become the fastest growing. Those will account for $41 billion of payments made via mobile by 2017, according to Forrester’s Denée Carrington. Proximity payments include those made via NFC, and require only that you move your mobile device near a receiver terminal to conduct a transaction, as with MasterCard’s PayPass.
There are still some soft-spots where mobile payments will run into challenges, according to Forrester. One of those is in mobile remittances, since consumers seem less eager to transact domestic and cross-border P2P and bill payment transactions on their devices, vs. online shopping or paying via NFC. Startups in this area, like Beamit which just raised $2.4M last April, should take note, although arguably this prediction is out of whack with other trends; mobile device use is fast-growing in developing nations, after all, which is a key target group for international money transfers.
The key to future growth for mobile payments will be convincing consumers that it is a much better alternative to the prevailing payment method, Forrester says. Highlighting convenience, security, and improved user experience are what will convince users to come on board, but it’ll require that there are clear and present advantages in each area in order to spur a mass movement towards mobile payment options.
I’d argue that every year of the last two or three has seemed at the outset like the one where mobile payments could really take off and become mainstream. Consumer interest is growing, and initiatives like ISIS and Google Wallet are actually launching and usable in real-world locations, so there’s every reason to believe that we’re on our way to that $90 billion mark, even if it will be hard to point to any one year as the year mobile payments finally arrived or hit the mainstream.