Panel: Mobile payments could reach $1 trillion by 2015

Innovative apps could still break new ground in the meantime, experts said

By Zach Miners, IDG News Service |  Mobile & Wireless

Using a smartphone to pay for purchases in lieu of a physical debit or credit card may become a US$1 trillion business by 2015, and some ancillary technologies for consumer engagement could help to make that happen.

Shopping for products on a smartphone is not new, but the field of mobile payments -- in which mobile devices such as smartphones can either accept physical credit card payments or make such payments without a card in brick-and-mortar stores -- has been growing. Experts now say the technology is largely in place, and that the biggest hurdles involve engaging with consumers and merchants.

"It's all finally happening. We have mobile payments now," said analyst Nick Holland with the Yankee Group, citing Square, Google Wallet and the Isis mobile payment system available in Salt Lake City and Austin, Texas, as prime examples.

The industry is complex. "Mobile payments" is often used as a catch-all term encompassing not only physical transactions made with the phone but also seamless billing services incorporated into mobile apps, and in-app store purchases such as buying songs on iTunes.

Yankee's Holland expects the total market for mobile transactions to reach $1 trillion per year by 2015. There are currently $7 trillion worth of transactions per year processed through Visa and MasterCard.

"It's a huge opportunity. We've only just skimmed the surface," he said during a panel discussion on Thursday at Apps World in San Francisco, a conference and trade show for app developers.

Until there is widespread adoption, developers should make complementary mobile apps that don't process any transactions, but still fall under the mobile payments umbrella, speakers on the panel agreed. The idea is that consumers could make purchases with a physical debit or credit card, or cash, but they would have immediate access to smartphone apps that would improve the transaction. The physical wallet is not going the way of the dinosaur anytime soon, the panelists said.

The goal would be to offer something that makes the transaction faster, cheaper and more convenient. "Payments work really well already," Holland said. "The existing credit card transaction is not a friction point for the consumer. So you have to be providing the consumer something bigger and better."

For example, apps could let consumers quickly perform price checks and do comparison shopping for a product at nearby stores. Yankee's Holland cited recent survey data showing that 56 percent of people with smartphones already do comparison shopping online, but there could be more apps built around this "top-level" opportunity for mobile payments, he said.

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