Apple will become leader in mobile payments by 2014

Apple will emerge as the leader in mobile payments by 2014. There is a possibility of acquiring one or more mobile payments companies like Zong in next 6 to 12 months. iTunes can become common platform for both physical and digital goods. Apple will take a lead on U.S carrier’s mobile payments initiative named ISIS.


Fig: Significant events in mobile payments landscape

With the series of patents on person to person payments, NFC chip behind the screen etc
make clear that Apple has a mobile payments strategy. With $50 bln in cash, apple is well positioned to acquire new startups in the space and hit the ground running.

On the other hand, three of the four national US telcos are to combine their mobile wallets to boost m-payments and ensure they control the trend. Verizon Wireless, AT&T and T-Mobile USA have formally announced their joint venture, Isis. The three carriers are working with financial institutions Barclays and Discover Financial Services. This alliance is trying to eliminate the card networks like visa and master card from the equation. They announced that this initiative might take at least 18 months, which is long lead-time.

The following table compares top3 initiatives:



Some stats on mobile payments market:

- One in every six mobile subscribers worldwide will own a device enabled with Near Field Communications (NFC) capabilities by 2014 according to Juniper Research.

- Juniper anticipates high growth in both North America and Western Europe over the next five years, adding global gross transaction value will exceed $110 billion by 2014.
- Boku raised $10 million in a recent round of funding to buy startups Mobillcash and Paymo in a transaction that was announced in June 2010.

- The number of mobile payment users worldwide will exceed 108.6 million in 2010, a 54.5 percent increase from 2009, when there were 70.2 million users, according to Gartner, Inc. Mobile payment users will represent 2.1 percent of all mobile users in 2010.

Mobile Payment Users by Region (Thousands)
Region 2009 2010
Western Europe 4,519 7,127
North America 1,905 3,502
Asia/Pacific 41,865 62,828
EMEA 16,823 27,091
Latin America 5,131 8,010
Total 70,242 108,558

Some recommendations for Telcos:

- It is recommended to proliferate the European market with NFC enabled handsets, so that the user has choice of picking a non-apple device. The adoption for telcos takes longer time than apple due to fragmented devices and OEMS.

- Finding an alternative business model other than a share in transactional revenue is very important. For ex: mining the user purchase history and suggesting alternative/relative products based on users location.

- Increase the carrier billing relationships beyond digital goods to small services purchase like train/movie tickets