Remote payments will grow to US $22.5 billion by 2014, more than NFC?

A white paper from Vesta Corporation claims remote payments will grow to US $22.5 billion by 2014, which will create more opportunity than NFC payments

Remote payments to drive USD $22.5 billion m-commerce market, white paper outlines how remote payments, not NFC, will provide lucrative opportunities for mobile operators

Add another NFC / mobile payments report to the pile. A study that was commissioned by Vesta Corporation and carried out by Informa finds that there is more opportunity in remote payments (read remittance payments) than NFC for MNOs. We wrote a article on remittance payments which can be found here. Our research for that article found a huge potential for remittance payments, or remote payments as this white paper terms it, but it did not outshine NFC payments or NFC mobile wallet projected usage that other research firms have found. This new Vesta Corporation white paper projects that there will be $22.5 billion in remote transactions by 2014, while projections from other research firms see NFC mobile wallet transactions topping $1 trillion by 2015.

According to Informa Telecoms & Media, money transfer services are expected to drive end-user revenues of six billion dollars by 2014.  ”This represents a significant and immediate commercial opportunity for mobile operators compared to NFC technology, which requires a large upfront investment and is expected to take at least three or four years to reach critical mass,” the company stated in its release.

“By driving the adoption of mobile wallet functionality through prepaid top-up, content purchases and bill payment services, operators can increase their subscribers’ comfort levels with m-commerce transactions,” said Joshua Rush, VP Marketing at Vesta Corporation.  “This will enable operators to position themselves at the heart of the m-commerce value chain, ahead of over-the-top players and in pole position to claim a significant share of the projected revenues.”

In basic terms this white paper outlines how MNOs are losing the app store battle and how profits from specific apps sold by MNOs are all but gone. Content marketing has always been an area where mobile network operators have attempted to secure profits. The report is suggesting that remote payments can be a massive growth area for carriers profits if done correctly.

“M-commerce clearly presents exciting opportunities to mobile operators,” says Shailendra Pandey, Senior Analyst for Mobile Content and Applications at Informa Telecoms & Media.  “It makes sense for operators to place more focus on utilizing their existing top-up and billing systems to drive m-commerce market growth.”

Pandey continues, “to do this effectively, it is important that operators form partnerships with other players that have specialist knowledge and proven technology in the m-commerce and e-commerce space.  This will ensure they develop and deploy secure and attractive services for their subscribers.”

We have to say that this report contains some great key metrics and identifies areas of growth for mobile network operators. However, the basis of the report in that NFC isn’t happening yet is flawed, and as such skews the whole report. If you read the report as something completely separate to NFC payments and do not compare it to physical wave and pay solutions, it makes a lot of sense. Perhaps they haven’t heard that Google Wallet is live, Visa Wallet is coming this fall and Isis will launch next year. Barclaycard have been launched for some time and MasterCard has all kinds of joint ventures and partnerships happening in Europe. We can’t get through a day without another NFC phone hitting the market and the media buzz around Google Wallet is massive.

NFC payments are closer to adoption levels than this report gives credit. Remittance payments are another huge market with some countries relying on it for the majority, yes majority, of their income. We think the m-commerce services that this report is referring to, which include mobile banking, remote mobile payments, local mobile payments and mobile money transfers, are a colossal piece of the mobile payments pie. However, NFC payments have the ability to eclipse them all and the infrastructure is coming together faster everyday. We feel sure that MNOs will make money on every piece of the mobile payments pie and where as it is nice to see specific numbers for a particular portion we doubt it is enough to waver mobile network operators gaze on NFC mobile wallets.

A great thing about this white-paper is that it is free to download, and contains a variety of graphs and figures that highlight NFC and other mobile payments, all for the price of some contact details – if you would like to take a look for yourself, download it from here.