Mobile Wallet Market

Report Code: IC1384

Global Mobile Wallet Market,

2012 – 2020

Mobile Wallet Market (Applications, Mode of Payment, Stakeholders and Geography) Global Share, Size, Industry Analysis, Trends, Opportunities, Growth and Forecast, 2012 - 2020

1 Lita Person Lead Analyst

Published: November 2013

Global Mobile Wallet Market,

2012 – 2020

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Global Mobile Wallet Market,

2012 – 2020

CHAPTER 2 EXECUTIVE SUMMARY

The mobile wallet market is in its most lucrative stage and is expected to generate significant revenues with increasing awareness levels, the ubiquity of mobile phones, and advancements in the mobile phone technology. In addition, the crucial drivers for this market are availability of user-friendly technologies and related advancements, rising significance of social media and mobile data usage, increasing convenience factor, and high usage of mobile wallet functionalities (value-added services). However, factors such as high deployment costs, security concerns, and lack of awareness pertaining to mobile phone wallet technology may impede the growth of the stated market moderately. The key strategies that most top market players are adopting in the current market scenario are product or service launches/enhancements and collaborations. It is expected that both these strategies will continue to remain prominent in the forecasted period. The current product or service launches/enhancements and collaborations are aimed at enhancing customers’ convenience and building a solid network among the telecommunication market channels.

Mobile wallet market based on the mode of payment is currently led by the remote payment method. This is largely due to significant reach of the remote payment methods and relative infancy of NFC technology. The number of consumers using their tablets and 17 smartphones as their regular Internet gadget is increasing tremendously. Besides this, a mobile wallet supporting remote payment transactions allows unbanked/under-banked consumers to make use of mobile commerce through their mobile computing devices. As for NFC payments, the retailer needs to invest in an NFC reader at the POS and customers need to have NFC-enabled handsets, which is still one of the major constraints in advance developing regions such as China, India and Russia. However, growing collaborative efforts between MNOs and banks in these regions, especially Asia Pacific will allow the NFC payments to catch up with remote payment methods during the forecast period. It is expected that the NFC product market will reach $xxx billion, growing at a CAGR of 147.4%. Out of all the NFC products, NFC handsets are expected to witness significant growth within the analysis period, followed by NFC readers and NFC Micro SD which is driven by the emergence of contactless technology and anticipated high consumer usage.

Growing awareness regarding mobile wallets and their applications, rising smartphone penetration and high affordability are expected to drive the mobile wallet application market. Mobile commerce is expected to account for $xxx billion in 2020, followed by mobile ticketing and money transfer applications. This growth is attributed to widespread smartphone adoption and implementation of multi-channel strategies by merchants due to increasing competition from Internet vendors.

Global Mobile Wallet Market,

2012 – 2020

TABLE 1 GLOBAL MOBILE WALLET MARKET REVENUES BY APPLICATION, 2013 – 2020 ($MILLION) CAGR% Applications 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (2013 - 2020) Mobile Commerce xx xx xx xx xx xx xx 541,260 xx xx xx Mobile Ticketing xx xx xx xx xx xx xx xx xx xx xx Mobile Coupons xx xx xx xx xx xx xx xx xx xx xx Money Transfers xx xx xx xx xx xx xx xx 269,827 xx xx Micro Payments xx xx xx xx xx xx xx xx xx 210,000 xx Others xx xx xx xx xx xx xx xx xx xx xx Total xx xx xx xx xx xx xx xx xx 5,250,000 127.5

Source AMR analysis, Primary Research and Company Publications

The global mobile wallet market stakeholders include software developers, mobile network operators (MNOs), OSS/BSS solution providers, handset manufacturers, mobile payment service providers, and content and applications and aggregators. Among the stakeholders, OSS/BSS solution providers and software developers are expected to witness fastest revenue growth for the mobile wallet market. The growth of OSS/BSS solution provider is attributed to the consistent development of mobile wallet in terms of technology. As for software developers, increasing smartphone and tablet usage for mobile shopping and other purposes, in addition to high acceptance of NFC technology for payment purposes 18 by retailers is expected to make the position of software developers stronger within the forecasted period.

The Porter’s five forces analysis signifies that the competition in the mobile wallet market currently is moderately high. It is expected that the competitive strategy will increase considerably, mainly due to increasing product launches, collaborations and acquisitions by large multinational corporations from the telecommunication industry. This will obviously deter new entrants to make an entry into this market. Technological innovation is turning out to be the main strategy for increasing the bargaining power of buyers. As far as the bargaining power of suppliers is concerned, the emphasis is more on collaborations and building a strong network among suppliers such as banks and mobile phone manufacturers and mobile payment service providers.

The product or service launches (updates or enhancement) is the principal strategy that top market players are expected to continue to follow within the forecasted period, followed by collaborations and acquisitions. The current product launches stresses on meeting the customer satisfaction and providing them with better services with every new innovation and effort.

Global Mobile Wallet Market,

2012 – 2020

3.3 Top ten factors impacting the mobile wallet market Following are the top ten factors that are impacting the market revenues, adoption rates and growth rates of mobile wallet and NFC market.

3.3.1 Realization of the significance of payment-enabled mobile phones Around 1.3 billion active debit and credit accounts exist in the world today, while there are nearly 5.3 billion active mobile phone accounts. There is a large possibility of payment-enabled mobile phones outnumbering conventional card-based payment accounts in the near future. This is what merchants and payment account issuers have now started realizing.

3.3.2 Connected and real-time marketing Mobile wallet offers an entirely new dimension to retail sales to improve their business presence. While mobile devices provide consumers with an easy way to make payments, they act as a new channel for merchants and financial institutions to connect with their customers. Information can be easily sent and received via mobile devices; they also run specialty applications, and are location-aware. The mobile connection facilitates 22 merchants and financial institutions to communicate information such as promotional offers with their customers in such a way that the information is targeted, useful, and more relevant to their interests. Businesses can also come up with new branded applications that are freely downloadable. As unique shopping preferences and needs of a person are tracked, this aspect can make customer communications highly personalized. Such a connected and real-time marketing offers a new opportunity and competitive challenge to marketers.

3.3.3 Accessibility Wide adoption of smartphones indicates the accessibility level for mobile wallet. Smartphone users are able to make the most of the mobile wallet functionalities, and it is expected that more such users will come up in the next few years owing to plenty of benefits that mobile wallet provides.

3.3.4 Value-added services and other benefits Whether it is discounts, coupons and offers; ticketing, loyalty programs, or comparison shopping, mobile wallet comprises it all, providing the convenience at its best. This factor, along with the rising number of smartphone users, will do good to the mobile wallet market in the near future.

Global Mobile Wallet Market,

2012 – 2020

Even, the other stakeholders such as mobile network operators (MNOs), handset manufacturers and mobile payment service providers are expected to foster their service experience for the consumers, with their product/service innovations.

3.6.4 Asia Pacific to rule the market The mobile wallet market is witnessing growth all across the world. Asia Pacific is expected to be the fastest growing region for the mobile wallet market, followed by EMEA and North America. This growth is attributed to increasing rate of mobile payments and mobile banking users, growing smartphone penetration and rising consumer awareness with regard to technology.

FIG. 7 TOP GEOGRAPHIES IN MOBILE WALLET MARKET

High

Promotion of m-payments and m-banking, Strong mobile phone /smart phone penetration rates and large rural populations and Increasing technological awareness are 30 driving the market growth Growing smartphone and tablet penetration, Rising NFC adoption for transport services in Europe and Wide adoption of mobile Asia Pacific payment services in Africa will set the market growth high.

Europe, Middle East & Africa

North America

RoW

Low

High Current Revenues Low

Source AMR analysis, Primary Research and Company Publications

As for EMEA, the growth will be fuelled by the rising NFC adoption for transport ticketing services and growth of mobile payment services in Africa. Extensive smartphone usage

Global Mobile Wallet Market,

2012 – 2020

CHAPTER 5 GLOBAL MOBILE WALLET MARKET BY APPLICATIONS

Presently, the mobile wallet market is in its most lucrative phase and is expected to grow in terms of popularity and usage in the next five years. The growth is attributed to increase in awareness about mobile wallets and their applications, increasing smartphone penetration, and affordability. The mobile wallet application market is projected to reach $7,630,012 million by 2020, growing at the compounded annual growth rate (CAGR) of 139.9% from 2013 to 2020.

TABLE 3 GLOBAL MOBILE WALLET MARKET REVENUES BY APPLICATION, 2013 – 2020 ($MILLION) CAGR Applications 2,011 2,012 2,013 2,014 2,015 2,016 2,017 2,018 2,019 2,020 (2013 - 2020) Mobile Commerce 2,708 xx xx xx xx xx xx xx xx xx xx Mobile Ticketing 349 xx xx xx xx xx xx xx xx xx xx Mobile Coupons 344 xx xx xx xx xx xx xx xx xx xx Money Transfers 381 xx xx xx xx xx xx xx xx xx xx Micro Payments 154 xx xx xx xx xx xx xx xx xx xx Others 164 xx xx xx xx xx xx xx xx xx xx 44 Total 4,100 xx xx xx xx xx xx xx xx 5,250,000 127.5 Source AMR analysis, Primary Research and Company Publications

5.1 Mobile commerce market The mobile commerce market is expected to account for about 57.10% of the overall mobile wallet application market by the end of 2020. The wide adoption of smartphones and the implementation of multi-channel strategies by merchants owing to the increasing competition from Internet vendors are influencing the growth of this market. Companies’ initiatives to enhance, optimize, and integrate mobile commerce platforms, services and apps for consumer engagement and better interaction are expected to augment the growth. Today, many consumers utilize app stores and make purchases, choosing from wide-ranging payment options, and this trend is likely to mount during the future, with the increasing number of users.

Global Mobile Wallet Market,

2012 – 2020

5.1.5.1 GEOGRAPHY MARKET The Asia Pacific region is leading the global mobile entertainment and event payments market, and is expected to continue the trend in the forecasted period. The stated market in Asia Pacific is projected to achieve the market size of $ xx billion by 2020 growing at a CAGR of xx% during 2013-2020. The growth will be fuelled by increasing mobile app users and development of new gaming and entertainment apps.

TABLE 9 GLOBAL ENTERTAINMENT AND EVENTS MARKET REVENUES BY GEOGRAPHY, 2013 – 2020 ($MILLION) CAGR% Regions 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (2013 - 2020) North America xx xx xx xx xx xx xx xx xx xx 136.7 EMEA xx xx xx xx xx xx xx xx xx xx xx Asia Pacific xx xx xx xx xx xx xx xx xx xx xx RoW xx xx xx xx xx xx xx xx xx xx xx Total xx xx xx xx xx 26,775 xx xx xx xx xx Source AMR analysis, Primary Research and Company Publications

5.2 Mobile ticketing market The desire of consumers to make mobile ticket purchases using their mobile phones is on the rise. Mobile ticketing initiatives benefit both involved, the ticker issuer and the buyer. 48 Consumers get an easy access to a digitized ticket via their mobile phones conveniently, while ticket sellers are able to save on staff and costs involved (for instance, printing of tickets). Presently, the mobile ticketing market is expanding steadily, and is projected to reach $735.0 million by 2020 growing at a CAGR of 142.3% from 2013 to 2020. Anticipated penetration of innovative ticketing solutions and extensive purchasing through mobile phones and NFC-based ticketing will fuel the growth of this market.

TABLE 10 GLOBAL MOBILE TICKETING MARKET REVENUES BY TYPE, 2013 – 2020 ($MILLION) CAGR Product 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (2013 - 2020) Rail, metro & bus tickets Airline tickets & boarding passes 144.7 Passenger check-in Baggage check-in Total 349 43,779 Source AMR analysis, Primary Research and Company Publications

Global Mobile Wallet Market,

2012 – 2020

CHAPTER 7 MOBILE WALLET STAKEHOLDERS MARKET

While the concerns related to full technological advantage, security and awareness are prevalent; the companies are directing their strategies and efforts towards controlling networks and technology-related costs, and coming up with innovations that will ensure enriched and better user experience in mobile wallet market.

TABLE 28 GLOBAL MOBILE WALLET REVENUE, BY STAKEHOLDERS, 2013 -2020 ($MILLION) CAGR Mobile Wallet 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (2013 - 2020) Mobile Network

Operators Software

Developers OSS/BSS Solution Providers Handset

Manufacturers Other 118.3 Stakeholders Content & Applications Aggregators Total 4,100 163,900 5,250,000 127.5 59 Source AMR analysis, Primary Research and Company Publications

The following table summarizes the mobile wallet stakeholders for NFC contactless payments. Due to the dynamic nature of this market, not all the stakeholders or the services they provide have been included in the table. The following list illustrates the widespread NFC ecosystem for the uncertain NFC market.

TABLE 29 MOBILE WALLET STAKEHOLDERS AND MAJOR COMPANIES STAKEHOLDER COMPANIES American Express, Discover, MasterCard Payment Networks Worldwide, Visa, PayPal Banks Bank of America, Citi, Barclays NFC Handset Manufacturers HTC, Nokia, LG, Samsung NXP Semiconductors, Gemalto, Oberthur NFC SE and UICC Suppliers Technologies Retailer POS Suppliers and Acquirers/Processors First Data, Verifone, Hypercom MicroSD and Specialized Hardware Solution Providers Tyfone, DeviceFidelity NFC Device Add-on Providers Wireless Dynamics, WatchData Technologies MNO/Telecom Related Services ISIS, Sprint, Smart Trust OS Providers and Web-based Services Companies Google, Apple, Microsoft Specialized Software Solution Developers and Vendors Google, Cassis, mFoundry Perso Bureaus First Data, Oberthur Technologies, G&D Trusted Service Managers (TSMs) Gemalto, First Data, Bell ID Source AMR analysis, Primary Research and Company Publications

Global Mobile Wallet Market,

2012 – 2020

7.1 Mobile Network Operators (MNOs) In recent years MNOs have transformed to multitasking and multi-communicating corporations that are able to generate revenue and build customer loyalty through mobile wallet services, with the built-up of new infrastructure.

TABLE 30 GLOBAL MOBILE NETWORK OPERATORS REVENUE, BY GEOGRAPHY, 2013 – 2020 ($MILLION) CAGR Product 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (2013 - 2020) North America EMEA 115.8 Asia Pacific 11,141 ROW 111.3 Total 1,230 523,906 119.0

Source AMR analysis, Primary Research and Company Publications

MNOs have influenced the success of mobile wallets greatly. Whether it is the mobile communication services or the network, all are under MNOs control, and they have the potential to institute and update the needed apps and functionality into the consumers’ handsets via SIM cards. As MNOs are not much experienced in the payment industry, they are focusing on collaborating with financial institutions to build consumer 60 confidence with their technological and marketing developments.

7.2 Handset and other Hardware Solution Manufacturers Mobile manufacturers focus more on launching handsets, equipped with better and efficient operating systems and several built-in features. They emphasize even more on the promotion part to make consumers aware of the salient features of their handsets. They communicate the mobile wallet capabilities to their consumers through their advertising and marketing initiatives. The main objective of mobile manufacturers is to provide a fast and excellent consumer experience by integrating the hardware with intelligent processors. While the focus remains on enhancing the customer base, they also enter into partnerships to benefit the overall market.

TABLE 31 GLOBAL HANDSET MANUFACTURERS REVENUE.BY GEOGRAPHY, 2013 – 2020 ($MILLION) CAGR Product 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (2013 - 2020) North America EMEA 110 22,232 124.2 Asia Pacific ROW 37 15,717 Total 410 89,970 127.5 Source AMR analysis, Primary Research and Company Publications

Global Mobile Wallet Market,

2012 – 2020

CHAPTER 8 GEOGRAPHIC ANALYSIS

The global mobile wallet market in terms of geography is categorized into North America, EMEA, Asia Pacific and RoW.

TABLE 37 COMPARATIVE CHART OF MARKET FACTORS AND GROWTH BY GEOGRAPHIC SEGMENTS CAGR REGION DRIVERS RESTRAINTS (2013-2020) Widespread smartphone and tablet Slower adoption of NFC adoption North payment services Higher Wi-Fi accessibility 134.5% America Consumer Concerns related More consumer awareness regarding to Security security solutions Growing Popularity of Social Media and Mobile Data Usage Growing smartphone and tablet penetration Lack of awareness of mobile Higher affordability of NFC handsets wallet functionalities EMEA 137% and POS systems Security and privacy Rising NFC adoption for transport concerns services in Europe Wide adoption of mobile payment 65 services in Africa Strong mobile phone /smartphone penetration rates and large rural populations Security and hardware Asia Pacific 143.8% Promotion of m-payments and m- interoperability issues banking Increasing technological awareness Lack of Security and Many consumers lack access to RoW Network Reliability Financial Services (Latin Lack of trust in the Service 131.5% Anticipated regulatory environment America) Lack of Knowledge leading to creation slower adoption Source AMR analysis, Primary Research and Company Publications

Global Mobile Wallet Market,

2012 – 2020

CHAPTER 9 CORPORATE PROFILES AND ANALYSIS 9.1 AMERCIAN EXPRESS 200 Vesey St, Manhattan, NY 10080, United States Phone +1 212 640 2000 Website www.americanexpress.com

9.1.1 Company overview American Express Company is a global services company. Popularly known for its charge cards and revolving credit cards, the company is also one of the world's largest providers of travel services. The company operates in four segments, namely U.S. Card Services, International Card Services, Global Commercial Services (GCS) and Global Network & Merchant Services (GNMS). Headquartered in New York City (NY), American Express has ubiquitous presence in 130+ countries worldwide, with more than 100 million cards in circulation. 9.1.2 Company snapshot 73 TABLE 43 AMERICAN EXPRESS BUSINESS SNAPSHOT Snapshot Description Year of Inception 1850 Primary Business Charge and Credit Payment Card Products and Travel-related Services Secondary Business Financial Advisors, Publishing Geographic Presence Worldwide Isis Mobile Wallet, Centurion Card, American Express Red, ExpressPay, Product Portfolio American Express Plum Card Key Strategic Move M&A, Product Launch, Collaboration  2009 24,336 Overall Financial Status  2010 27,582 (Revenue in  2011 29,962 $MILLIONs)  2012 31,582 Source Company’s Annual Report 2012

9.1.3 Business performance The company generated revenue of $ 31.6 billion in 2012 and $ 30.0 billion in 2011. The increase of $ 1.6 billion or 5 percent in 2012 – in the consolidated total revenues net of interest expense – as compared to the previous year, reflected increases of 7 percent in Global Network & Merchant Services (GNMS), 6 percent in U.S. Card Services (USCS), 3 percent in Global Commercial Services (GCS) and 1 percent in International Card Services (ICS).

Global Mobile Wallet Market,

2012 – 2020

FIG. 10 FINANCIAL REVENUES BY BUSINESS UNITS (2012)

Source Company’s Annual Report 2012

FIG. 11 FINANCIAL REVENUES BY GEOGRAPHY (2012)

Source Company’s Annual Report 2012

9.1.4 Strategic moves and developments American Express is in full swing in enhancing its global footprint. Whether it is product/service launch or collaborations, the Company is using every possible way to expand its market, attract new customers and grow internationally to deliver additional value to customers.

9.1.4.1 PRINCIPAL STRATEGIES SERVICE LAUNCH October 2013 – American Express and TripAdvisor had teamed up to launch a first-of-its kind integration for enhanced travel planning experience. This integration will facilitate Card Members in the US, UK and Australia to connect their American Express Cards with their TripAdvisor profiles to access exclusive Card Member hotspot lists, post Card Member reviews, and get special merchant offers.

Global Mobile Wallet Market,

2012 – 2020

October 2013 – American Express, Visa and MasterCard had introduced a proposed framework for a new global standard to enhance the security of digital payments and simplify the purchasing experience when shopping on a mobile phone, tablet, personal computer or other smart device, thus making online and mobile shopping simpler and safer.

April 2013 – American Express had announced that it will begin issuing Corporate Cards with chip & signature technology to U.S. Corporate Cardmembers, starting with the premium Card portfolios in the first half of 2013. This introduction of EMV technology will now facilitate U.S. Corporate Cardmembers to experience a seamless international payments process.

9.1.4.2 SECONDARY STRATEGIES COLLABORATION March 2013 – American Express and luxury vacation club Inspirato LLC had entered into a partnership to deliver the club’s unique vacation experiences American Express Cardmembers, under the brand “Inspirato with American Express.”

9.1.5 Swot analysis & strategic conclusions

75 Strengths Weakness Global Market Leader Bad Acquisition Diversified Global Presence Traveller's Check Usage Decline Asset Leverage Lack Debit Card Customer Loyalty Unique Financial Products

Opportunities Threats Continued Revolution in Online and Technological Changes Mobile Technologies Changing Government regulations and Inorganic Growth Strategy Financial Crisis Fierce Competition

Source Company’s Annual Report and AMR Analysis

Global Mobile Wallet Market,

2012 – 2020

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