NFC and Electronic Wallet Still Largely Irrelevant in Global Mobile Payment But Will Grow Eventually

Research companies Gartner and Berg Insight recently released reports regarding the state of mobile payment. While Gartner's report covers the world market, Berg's report covers just the United States and both discovered that NFC and services like Google Wallet have yet to make a mark in mobile payment adoption. The majority of mobile payments according to Gartner is made up of direct money transfers while Berg's report says Starbucks cards dominates in the US.

GigaOm reports that while there are many mobile wallet and payment services such as Square, Dwolla, and Google Wallet, Starbucks' cards have a far wider reach across the United States as it has more than 7000 outlets in the country. With the independent mobile payment providers, the challenge is to find retailers and merchants that accept their apps which puts them at a disadvantage compared to Starbucks' massive presence.

Square's deal with Starbucks does give it access to the Starbucks network but the majority of the transactions are still through Starbucks' own gift card and gift card app especially as the app offers far more than just a card replacement. The adoption of external mobile payment apps require additional training on the part of retail staff which adds complexity in to the procedure, making internally produced gift cards and apps much easier ways to pay.

Berg Insight sees this trend lasting only a short while though, as the Starbucks cards and app are seen as opening the way for consumers to be more familiar with digital payments instead of credit cards or cash. The company predicts adoption of merchant-agnostic services will overtake single-merchant ones and become the more common way for consumers to digitally make payments by 2017.

Gartner's report, which was brought up by AppleInsider shows value of mobile payment reaching $235.4 billion, 71% of which will be made up primarily of direct transfers. The report has cooled its expectations on NFC payments, cutting it by 40% from its previous projection. NFC-based payment is expected to represent no more than 2% of all mobile payments globally this year, rising to no more than 5% by 2017.

Money transfers are made easier thanks to mobile banking services being available through SMS and short code services provided by mobile network operators. The lack of need for specific apps allow for far more consumers to take advantage of this ability as the service covers all kinds of mobile phones from the low end all the way to the top. With NFC, not only does the service need to be supported by the mobile devices, it requires additional step for consumers to link their bank accounts to their mobile accounts.

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