New Fad in 4 Years Will Be Mobile Payment – KPMG
Mobile payment will become the mainstream for consumers over the next four years as companies race to take advantage of the mass adoption of smartphones and rapid development of new technologies to offer this service, according to global survey of business executives by KPMG International.
“We believe that exploding smartphone growth and myriad opportunities will grow mobile payments at a much faster rate than our respondents anticipate,” said Gary Matuszak, KPMG Global Chair of the Technology, Communication and Entertainment practice.
KPMG surveyed about 1,000 executives in the financial services, technology, telecommunications, and retail industries globally to examine the leaders, opportunities, advantages and barriers in mobile payment. The survey took place in the Americas, Europe, Middle East, Asia/Africa, and Asia Pacific, involving 970 business people, including 250 in the U.S., in primarily the financial services, technology, telecommunications and retail industries.
The report comes as PayPal introduced today a new payment functionality allowing Android users to pay each other by tapping two near field communication (NFC)-enabled devices together.
The survey found that 83 percent of the respondents believe that mobile payment will be widely accepted by consumers within four years, compared to only nine percent who see them as mainstream today. In fact, 46 percent believe mobile payments will be mainstream within two years.
“A wide variety of payments is ready for adoption, as several key players already provide or are rolling out mobile payments, and interest among consumers in utilizing mobile payments is growing, in line with the industry’s readiness to deploy them,” Matuszak added.
Approximately 72 percent of the executives predict mobile payment to be reasonably important in the future, with specialist online systems building on its leading position as a payment method, and m-banking and near field communication (NFC) gaining significantly greater traction than today. In addition, 58 percent said they a mobile payment strategy is already in place.
“While there is consensus about the significant value of this opportunity among executives across geographies and industries, the type and size of opportunity varies between developed and developing countries depending on depth and reach of the financial infrastructure in place,” said Matuszak.
Matuszak said those firms that are willing to engage in cross-industry partnerships and ‘ co-opetition’ “are more likely to succeed and dominate the market due to the complex set of business relationships required to deliver mobile payments to a mass market.”
Despite major concerns raised by business leaders over security and privacy issues with mobile payment, KPMG said the respondents believe other factors are more compelling attributes of a successful mobile payment strategy.
Some 81 percent believe convenience/accessibility of mobile payment is the highest attribute, while 73 percent prioritize simplicity/ease of use, 57 percent on security, and 43 percent on low cost.
At the same time, business leaders, globally, view security as the main challenge to developing mobile payments strategies. Technology and adoption of the technology is a distant second, followed by privacy.
“The business leaders understand that when it comes to consumers choosing a provider based on security, reputation can make the difference, and any damage to a business’ brand can prove costly, even to the extent of being a showstopper,” said Sanjaya Krishna, KPMG U.S. Digital Services Leader in the TCE practice.
“As a result, leading businesses are adopting multiple approaches to alleviate customers’ privacy and security concerns.”
“One surprising result of our survey is the absence of divergent views across both industries and geographies, which speaks to the consensus that mobile payment is regarded as an opportunity for players across the value chain of commerce,” Matuszak said.
Respondents said banks with the highest in level of importance in the value chain, and credit card companies will have the most important roles, while the mobile payment industry projected a major leap in the coming years.
They placed telecommunications companies third, ahead of specialist online payment players (e.g. PayPal, Boku, Obopay), online service provider giants (e.g. Google, Facebook, Amazon), retailers and technology companies.
In USA, respondents placed online service provider giants in third place, and specialist online payment players and telecommunications companies in second.
The five current mobile payment methods competing in the markets will dictate the success of these companies, KPMG said. The respondents see specialist online systems leading the pack because of its already greater penetration than alternatives, which is expected to increase.
Respondents said that specialist online systems have the greatest prospect for success, followed by mobile banking, NFC, carrier billing and the “mobile wallet.”
“While KPMG believes that these forms of mobile payment will all gain some traction, our view is that M-Wallet is one of the most exciting and promising payment opportunities. M-Wallet provides the momentum to move beyond payments to participate in the entire chain of mobile commerce, from consideration and brand awareness to purchase after-sales loyalty and care,” said Tudor Aw, Technology Sector Head, KPMG Europe.
Mobile payment methods include M-wallet account and transaction information is stored on the devices’ SIM card), M-banking (with direct access to bank services and information), NFC – short-range (wireless communication technology enabling exchange between devices), Specialist Online systems (online payment processing systems such as Google checkout and PayPal) and Carrier billing (purchases are charged to the mobile phone bill).