Given the scope of some of the predictions seen on the m-payments front and the relative newness of the industry still, it would seem sensible to read these forecasts with a healthy dose of skepticism.  Certainly, with the breadth in the figures put forth over the years alone, the question arises as to whether these are derived based more on reality, wishful thinking, or even, at times, a dart board?  More importantly, are these prognostications useful in bringing the industry forward?  Perhaps as an energizing force, they do help to allow space for new ventures to emerge.  Yet, if overly inflated, they risk reducing longer-term faith in what success will look like, and setting bars that are far too high to meet.

Looking back a few years, in 2009 Gartner predicted m-payments would be $4.5B in 2012.  Now the total is already far ahead of that.  In mid-2006, Juniper said m-payments would rise from $155M for 2005 to $10B in 2010.[1]  In 2007, they predicted that the mobile payment market would rise from $77.6M in 2007 to $11.5B in 2011.[2]  Closer to reality, in 2011, Gartner said that mobile payments for the year would total $86.1B.   Meanwhile, Yankee Group and Juniper each estimated around $240B for this past year.  Definitions do seem to differ slightly in what the calculations include. 

And what about what they predict for a few years down the road?   By 2008 various predictions circulated stating that 2013 would see $300B.  More currently, Juniper says 2015 will see $670B in m-payments and Yankee Group says it will then be over $1.5 Trillion.  From all the under-predicting early on, it is hard to know what if anything to believe about three to five years ahead.  Yet, with Goldman Sachs saying global retail overall will total $4.2 Trillion by 2020, some context can be derived for the large $1.5 Trillion 2015 prediction.

Overall what is driving the figures?  One continuing element is the role of NFC, and its accompanying hype.  Although, in fact, one piece of that puzzle is finally emerging:  in 2011, 35m NFC-ready handsets were shipped, with 80m predicted for 2012.[3]  Keeping in mind there are now 5.3B mobile subscribers[4] however, puts a bit of a different perspective on that handset growth.  In other words, there is a long way to go for NFC in handsets alone.

Looking elsewhere, there have been a good amount of mergers and acquisitions on the m-payments front.  From Visa investing in Square (purportedly now worth $1.4B!) and acquiring Fundamo; Paypal acquiring Zong; Verifone taking in Hypercom (e-payments); Amex investing in Payphone (strategically viewed as being primarily for Serve, its earlier m-wallet acquisition) and also buying Sometrics (virtual currency); Intuit purchasing Mobile Money Ventures; and FiServ buying M-Com.  This is just a small slice of the M&A picture in 2011.  There was also ISIS, the Google Wallet announcements, and a host of other movements.

Did more transpire in 2011 than previously?  Undoubtedly.  And likely even more is ahead on the docket for 2012 because there are more firms in the service provision arena and ever more companies wishing to offer such mobile financial services to customers.  This combination means that the ceiling has yet to be reached. 

Yet despite a mainstream mentality towards MFS on the corporate side, the masses have, for the most part, yet to see options for accessing and utilizing such services – whether they be developed or developing country-based.  Thus the challenge for 2012 is entirely around gaining ground on scale.  

Strategic partnerships could be the killer app for that, as the larger players have all at this point already implicated themselves in some form of partnership, acquisition or internal program (if not all of the above).  Everyone needs to constantly revisit the applicability of their service to their markets, direct their efforts to logical payment tie-ins (starting even at the most obvious daily payment activities in a target audience), and hit the ground running with a functioning service to gain traction, acceptance, and ultimately preferential share.  And of course, that is not to minimize the issue of who owns the customer, or of who gets what share of the transaction fees.  Meanwhile, this will remain a game of scale, and so far, fortunately for newer-comers, the pot has continued to grow larger.[5]

But wait, latest predictions are that there’s a demon around the corner we’ve heard less about till now but which could throw a giant monkey wrench in the works – that is, mobile malware.  More on that and its impact on m-payments in a future edition.