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1. Which segments of the mobile payments market are growing the fastest?

2. How will mobile payments vendors maximise their revenue opportunities?

3. What key trends are emerging on a market-by-market basis?

4. What are the key factors driving mobile payment market growth?

5. What strategies are mobile payments providers employing?

Key questions the report answers:

• Entire Ecosystem Analysed

• Expert Industry Intelligence

• Fully Updated Third Edition

This invaluable market sizing tool delivers an insightful synopsis of the opportunity for each of the mobile payment segments projecting gross mobile payment transaction values for eight key regions up until 2015. For more in-depth sector focused forecasts, please see each of three related reports within the mobile commerce stream.

This fully updated third edition defines the current mobile This fully updated third edition defines the current mobile payments market structure, exploring a number of vendor applications and services, central to emerging trends within the value chain over the past 12 months.

This report provides the definitive big picture view of the entire mobile payment market, delivering detailed vendor analysis and forecasts for three segments of this rapidly developing landscape; mobile payments for digital and physical goods, NFC retail marketing and mobile payments; and mobile money transfer & remittances (domestic and international).

Mobile CommerceMobile Content & Applications Handsets & Devices Mobile Markets & Strategies Networks & Technologies

Opportunities & Markets 2011-2015

Mobile Payment Strategies

Market Analysis & Strategic Assessment 2011-2015

Published July 2011

Mobile Payment Strategies: Opportunities & Markets 2011-2015

Page 1

Table of Contents

Executive Summary ...................................................................... 7

ES1 Remote and Proximity Payments ............................................................... 7

ES2 Report Focus: What is Included? ................................................................ 8

ES3 Market Drivers and Constraints .................................................................. 9

ES4 Market Projections ....................................................................................... 9

ES5 Recommendations ...................................................................................... 12

Mobile Commerce & Payments Market .................................... 15

1.1 Market Outline ............................................................................................. 15

1.1.1 Synopsis .................................................................................................................................................................. 15

1.1.2 Market Segmentation .......................................................................................................................................... 16

Figure 1.1: Mobile Commerce Market Segmentation ...................................................................................... 16

1.2 Market Drivers and Constraints ................................................................. 17

Figure 1.2: Mobile Payments: Summary of Market Drivers & Constraints ................................................ 17

1.2.1 Drivers .................................................................................................................................................................... 17

i. Convenience & User Demand .............................................................................................................................. 17

ii. Increase in ARPU .................................................................................................................................................... 18

iii. Larger Retail Transactions ................................................................................................................................... 18

iv. Cash Replacement ................................................................................................................................................. 18

v. Developing World .................................................................................................................................................. 18

vi. Lower Churn ........................................................................................................................................................... 19

vii. Smartphone Growth ............................................................................................................................................ 19

viii. SMS .......................................................................................................................................................................... 19

ix. eCommerce............................................................................................................................................................. 20

x. Migrant Worker Remittances .............................................................................................................................. 20

xi. Transaction Efficiency ........................................................................................................................................... 21

xii. Success Stories & PR ............................................................................................................................................ 21

xiii. Future Services ..................................................................................................................................................... 21

xiv. One to One Marketing ....................................................................................................................................... 21

1.2.2 Constraints ............................................................................................................................................................ 22

i. User Experience ....................................................................................................................................................... 22

ii. Business Model & Payouts .................................................................................................................................... 23

Figure 1.3: NFC Ecosystem Top Level View ..................................................................................................... 23

iii. Smartphone Proliferation ..................................................................................................................................... 25

Mobile Payment Strategies: Opportunities & Markets 2011-2015

Page 2

iv. Regulatory Hurdles ............................................................................................................................................... 25

v. Transaction Costs ................................................................................................................................................... 26

vi. Disclosure ................................................................................................................................................................ 26

vii. Inadequate Local Agent Networks................................................................................................................... 26

viii. Device Availability ................................................................................................................................................ 26

ix. Service Complexity and Management .............................................................................................................. 27

Figure 1.4: NFC Ecosystem Detailed View ........................................................................................................ 27

Mobile Payments: Market Structure and Trends ...................... 30

2.1 Definition....................................................................................................... 30

Figure 2.1: mCommerce Payment Process ........................................................................................................ 30

2.2 Market Segmentation .................................................................................. 31

2.2.1 Top level Segments ............................................................................................................................................. 31

Figure 2.2: Mobile Payments Market Segmentation ......................................................................................... 32

2.2.2 Market Segment Detail ...................................................................................................................................... 33

i. Remote Payments .................................................................................................................................................... 33

ii. Proximity/POS Payments ...................................................................................................................................... 33

2.2.3 Market Segment Boundaries ............................................................................................................................. 33

i. Mobile Money Transfer Service Expansion ....................................................................................................... 34

ii. Variation Within Segments ................................................................................................................................... 34

Figure 2.3: Arriva Buses Mobile Ticketing Service ........................................................................................... 34

iii. Platform & Service Extension ............................................................................................................................. 35

iv. Emerging Segments ................................................................................................................................................ 36

2.2.4 Report Focus: What is Included?..................................................................................................................... 36

2.3 Classification of Payment Schemes ........................................................... 36

Table 2.1: Mobile Payment Classification ......................................................................................................... 36

2.3.1 Mobile Phone Bill – “D2B” (Direct to Bill) Payment .................................................................................. 37

2.3.2 Premium Rate SMS (PSMS) ............................................................................................................................... 38

i. Advantages of PSMS Payment ............................................................................................................................... 38

ii. Disadvantages of PSMS Payment ......................................................................................................................... 38

2.3.3 Mobile Web & WAP Billing .............................................................................................................................. 39

2.3.4 SMS/Java/SIM Toolkit .......................................................................................................................................... 40

Figure 2.4: PayPal Mobile “Text To Buy” ........................................................................................................... 40

Figure 2.5: PayMate Purchase Process ................................................................................................................ 41

2.3.5 Person-to-Person (P2P) Payment .................................................................................................................... 41

2.3.6 Smartphone Apps ................................................................................................................................................ 42

Figure 2.6: SBB Swiss Railways iPhone App ....................................................................................................... 42

2.3.7 NFC Contactless Payment ................................................................................................................................ 42

i. NFC Technology ...................................................................................................................................................... 42

Figure 2.7: Typical NFC Implementation ............................................................................................................ 44

Mobile Payment Strategies: Opportunities & Markets 2011-2015

Page 3

ii. NFC Implementation .............................................................................................................................................. 44

Figure 2.8: Oyster Card Using MIFARE Technology ....................................................................................... 44

Figure 2.9: Uses of NFC .......................................................................................................................................... 45

Figure 2.10: N Mark Logo ....................................................................................................................................... 45

iii. NFC in the Device ................................................................................................................................................. 46

iv. Interim NFC Form Factor Solutions ................................................................................................................. 46

Figure 2.11: Integration Phase Comparison – NFC and Mobile Broadband.............................................. 47

Figure 2.12: Twinlinx My-Max NFC Sticker ....................................................................................................... 47

Figure 2.13: Giesecke & Devrient NFC SD Card ............................................................................................. 48

Figure 2.14: NFC Case for iPhone ....................................................................................................................... 48

Figure 2.15: VeriFone PAYware Mobile Enterprise ......................................................................................... 49

v. Further Vertical Markets ....................................................................................................................................... 49

2.3.8 In Store ................................................................................................................................................................... 49

Figure 2.16: Mocapay Mobile Commerce Platform.......................................................................................... 50

2.4 On Deck & Off Deck .................................................................................... 50

Case Studies: Applications and Services ................................... 52

3.1 Introduction .................................................................................................. 52

3.2 Digital Goods Case Studies ......................................................................... 52

3.2.1 Greater Copenhagen Traffic Companies (Denmark) ................................................................................. 52

Figure 3.1: Mobile Ticketing in Copenhagen – 1415.dk .................................................................................. 53

3.2.2 Badoo & Ericsson ................................................................................................................................................. 53

3.2.3 TDC Denmark & Aepona .................................................................................................................................. 54

3.2.4 Virgin Media & OpenMarket (UK) .................................................................................................................. 54

3.3 Physical Goods Case Studies ....................................................................... 55

3.3.1 Danal (Korea) ....................................................................................................................................................... 55

Figure 3.2: Danal Mobile Payment Service ......................................................................................................... 55

Figure 3.3: Danal Mobile Payment Transaction Value 2001-2010 (KRW 100m) ..................................... 56

3.3.2 Brooks Brothers & Digby (US)......................................................................................................................... 56

Figure 3.4: Brooks Brothers Mobile Site............................................................................................................. 57

3.3.3 Amazon................................................................................................................................................................... 57

Figure 3.5: Amazon Mobile Shopping................................................................................................................... 58

3.3.4 eBay Mobile ........................................................................................................................................................... 58

Figure 3.6: eBay “Store in Your Pocket” ............................................................................................................ 59

3.4 NFC Case Studies ......................................................................................... 59

3.4.1 France Telecom Orange .................................................................................................................................... 59

i. Orange Strategy ........................................................................................................................................................ 59

ii. Cityzi Pilot ................................................................................................................................................................. 60

Figure 3.7: Cityzi Mobile Ticketing ....................................................................................................................... 60

3.4.2 Telefonica, Visa & La Caixa (Spain) ................................................................................................................. 62

Mobile Payment Strategies: Opportunities & Markets 2011-2015

Page 4

Figure 3.8: Sitges Mobile Shopping ....................................................................................................................... 62

3.4.3 Osaifu-keitai (Japan) ............................................................................................................................................ 63

i. FeliCa Services ..................................................................................................................................................... 63

Figure 3.9: Osaifu-Keitai Service Concept ......................................................................................................... 63

ii. NTT DOCOMO and KT ............................................................................................................ 64

3.4.4 MasterCard, Gemalto, Garanti Bank and Avea (Turkey) .......................................................................... 64

3.5 Mobile Money Transfers and Remittances ................................................ 65

3.5.1 Safaricom M-PESA ............................................................................................................................................... 65

i. Service Description ................................................................................................................................................. 65

ii. Service Statistics ...................................................................................................................................................... 65

Figure 3.10: M-PESA Tariff ..................................................................................................................................... 66

iii. Service Developments .......................................................................................................................................... 66

3.5.2 Smart Money......................................................................................................................................................... 66

Figure 3.11: SmartMoney Service Features ........................................................................................................ 67

Figure 3.12: Smart Money Online Stores ........................................................................................................... 68

3.5.3 Western Union .................................................................................................................................................... 68

Figure 3.13: Western Union Product Development Strategy ...................................................................... 70

3.5.4 mService (Vietnam) ............................................................................................................................................. 70

Vendors and Solutions ................................................................. 74

4.1 Aepona .......................................................................................................... 74

Figure 4.1: Aepona NaaS Concept ....................................................................................................................... 76

4.2 C-SAM ........................................................................................................... 76

4.3 Digby .............................................................................................................. 77

Figure 4.2: Digby Rich Retailer Branded App .................................................................................................... 80

4.4 eServGlobal .................................................................................................. 80

Figure 4.3: eServGlobal Product Overview ....................................................................................................... 81

4.5 Ericsson ......................................................................................................... 82

Figure 4.4: Ericsson IPX Ecosystem ..................................................................................................................... 83

4.6 Fundamo ....................................................................................................... 84

4.7 Gemalto ........................................................................................................ 86

4.8 MoreMagic .................................................................................................... 88

4.9 Seamless ........................................................................................................ 89

4.10 tyntec ........................................................................................................... 91

4.11 Utiba ............................................................................................................ 92

4.12 VeriFone ...................................................................................................... 94

4.13 ViVOtech..................................................................................................... 95

Mobile Payment Strategies: Opportunities & Markets 2011-2015

Page 5

Market Forecasts ......................................................................... 97

5.1 Methodology ................................................................................................. 98

5.1.1 Approach and Assumptions .............................................................................................................................. 98

Figure 5.1: Market Forecast Methodology ......................................................................................................... 98

5.2 Global Mobile Subscriber Forecast ............................................................ 99

Figure 5.2: Mobile Subscriber Base (m) Split by 8 Key Regions 2011-2015 ........................................... 100

Table 5.1: Mobile Subscriber Base (m) Split by 8 Key Regions 2011-2015 ............................................. 100

5.3 Mobile Payment Market Forecasts........................................................... 101

5.3.1 Digital and Physical Goods ............................................................................................................................. 101

i. Digital Goods .......................................................................................................................................................... 101

Figure 5.3: Total Remote mPayment Gross Transaction Value for Digital Goods ($m) Split by 8 Key

Regions 2011-2015 ................................................................................................................................................ 102

Table 5.2: Total Remote mPayment Gross Transaction Value for Digital Goods ($m) Split by 8 Key

Regions 2011-2015 .............................................................................................................................................. 102

ii. Physical Goods ....................................................................................................................................................... 103

Figure 5.4: Total Remote mPayment Gross Merchandise Sales Transaction Value for Physical Goods

($m) Split by 8 Key Regions 2011-2015........................................................................................................... 103

Table 5.3: Total Remote mPayment Gross Merchandise Sales Transaction Value for Physical Goods

($m) Split by 8 Key Regions 2011-2015 ......................................................................................................... 104

iii. Digital and Physical Goods Combined ............................................................................................................ 104

Figure 5.5: Global Remote mPayment Market: Gross Merchandise Sales Transaction Value ($m) Split

by 8 Key Regions 2011-2015 .............................................................................................................................. 105

Table 5.4: Global Remote mPayment Market: Gross Merchandise Sales Transaction Value ($m)

Split by 8 Key Regions 2011-2015 ................................................................................................................... 106

Figure 5.6: Global Remote mPayment Market: Gross Merchandise Sales Transaction Value (%) Split

by 8 Key Regions 2011-2015 .............................................................................................................................. 107

Table 5.5: Global Remote mPayment Market: Gross Merchandise Sales Transaction Value (%) Split

by 8 Key Regions 2011-2015 ............................................................................................................................. 107

Figure 5.7: Global Remote mPayment Market: Gross Merchandise Sales Transaction Value (%)

Digital vs. Physical Goods Comparison 2011-2015 ...................................................................................... 108

Table 5.6: Global Remote mPayment Market: Gross Merchandise Sales Transaction Value (%)

Digital vs. Physical Goods Comparison 2011-2015 ..................................................................................... 108

5.3.2 NFC109

Figure 5.8: Total NFC Ticketing and Retail Payments Transaction Value ($m) p.a. Split by 8 Key

Regions 2011-2015 ................................................................................................................................................ 109

Table 5.7: Total NFC Ticketing and Retail Payments Transaction Value ($m) p.a. Split by 8 Key

Regions 2011-2015 .............................................................................................................................................. 109

Figure 5.9: Total NFC Ticketing and Retail Payments Transaction Value (%) p.a. Split by 8 Key

Regions 2011 & 2015 ............................................................................................................................................ 110

Table 5.8: Total NFC Ticketing and Retail Payments Transaction Value (%) p.a. Split by 8 Key

Regions 2011 & 2015 .......................................................................................................................................... 110

5.3.3 Mobile Money Transfers ................................................................................................................................. 111

Figure 5.10: Total Value of All Mobile Money Transfers ($m) p.a. Split by 8 Key Regions 2011–2015

.................................................................................................................................................................................... 111

Mobile Payment Strategies: Opportunities & Markets 2011-2015

Page 6

Table 5.9: Total Value of All Mobile Money Transfers ($m) p.a. Split by 8 Key Regions 2011–2015

.................................................................................................................................................................................. 111

Figure 5.11: Comparison of Domestic, Sophisticated Financial Services & International Mobile Money

Transfer Transaction Values (% of total) 2011-2015 .................................................................................... 112

Table 5.10: Comparison of Domestic, Sophisticated Financial Services & International Mobile

Money Transfer Transaction Values (% of total) 2011-2015 .................................................................... 112

5.3.4 Total Mobile Payment Market ........................................................................................................................ 113

i. Regional Split ........................................................................................................................................................... 113

Figure 5.12: Total Mobile Payment Market ($m) Split by 8 Key Regions 2011 – 2015........................ 113

Table 5.11: Total Mobile Payment Market ($m) Split by 8 Key Regions 2011 – 2015 ...................... 114

Figure 5.13: Total Mobile Payment Market (%) Split by 8 Key Regions 2011 – 2015 .......................... 114

Table 5.12: Total Mobile Payment Market (%) Split by 8 Key Regions 2011 – 2015 ......................... 115

ii. Market Segment Split ........................................................................................................................................... 116

Figure 5.14: Total Mobile Payment Market ($m) Split by Digital & Physical Goods, NFC & Mobile

Money Transfers 2011 – 2015 ............................................................................................................................ 116

Table 5.13: Total Mobile Payment Market ($m) Split by Digital & Physical Goods, NFC & Mobile

Money Transfers 2011 – 2015 .......................................................................................................................... 116

Figure 5.15: Total Mobile Payment Market (%) Split by Digital & Physical Goods, NFC & Mobile

Money Transfers 2011 – 2015 ............................................................................................................................ 117

Table 5.14: Total Mobile Payment Market (%) Split by Digital & Physical Goods, NFC & Mobile

Money Transfers 2011 – 2015 .......................................................................................................................... 117

Glossary ............................................................................................................. 118

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Mobile Payments for Digital & Physical GoodsAnalysis, Markets & Vendor Strategies 2011-2015

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