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Point/Counterpoint Series: Mobile Payments Seen as ‘Mainstream’ for Consumers within Four Years

This article is featured as part of a “Point/ Driving Customer Adoption and Addressing Concerns Counterpoint” series illustrating the various views on the emergence of mobile payments. While the majority of the business leaders surveyed Look for a commentary in the next issue on believe consumers are currently concerned about security the health of the card market. and privacy when using mobile devices, they believe other As companies race to take advantage of the mass adoption factors are more compelling attributes of a successful of smartphones and rapid development of new technologies mobile payment strategy. Specifically, 81 percent believe to offer mobile payment services, executives believe the use convenience/accessibility is the highest attribute, followed of a mobile phone or device to make payments or conduct by simplicity/ease of use, at 73 percent, security, at 57 banking transactions will require four years to become percent, and low cost, at 43 percent. widely accepted by consumers, according to a global survey At the same time, business leaders, globally and in the of business executives by KPMG International, a global net- U.S., view security as the main challenge to developing work of firms providing audit, tax, and advisory services. mobile payments strategies. Technology and adoption of The KPMG survey of nearly 1,000 executives in primarily the technology is a distant second, followed by privacy. the financial services, technology, telecommunications, “The business leaders understand that when it comes to and retail industries globally found that 83 percent of the re- consumers choosing a provider based on security, reputa- spondents believe that mobile payments will be mainstream tion can make the difference, and any damage to a business’ within four years, compared to only nine percent who see brand can prove costly, even to the extent of being a show- them as mainstream today. In fact, 46 percent believe stopper,” said Sanjaya Krishna, KPMG U.S. Digital Services mobile payments will be mainstream within two years. Leader in the TCE practice. “As a result, leading businesses “We believe that exploding smartphone growth and are adopting multiple approaches to alleviate customers’ myriad opportunities will grow mobile payments at a much privacy and security concerns.” faster rate than our respondents anticipate,” said Gary “One surprising result of our survey is the absence of Matuszak, KPMG global chair of the technology, communi- divergent views across both industries and geographies, cation and entertainment practice. “A wide variety of pay- which speaks to the consensus that mobile payment is ments is ready for adoption, as several key players already regarded as an opportunity for players across the value provide or are rolling out mobile payments, and interest chain of commerce,” Matuszak said. among consumers in utilizing mobile payments is growing, in line with the industry’s readiness to deploy them.” Race to Lead the Mobile Payments Market Seventy-two percent of the executives said that mobile payments are now or will be reasonably important With the mobile payments industry poised to in the future, with specialist online systems make a major leap in the coming years, several building on its leading position as a payment players are expected to play significant roles, method, and m-banking and near field com- though two groups of financial institutions are munication (NFC) gaining significantly greater the current front-runners, say respondents. traction than today. Fifty-eight percent said they Banks, which scored the highest in level of have a mobile payments strategy in place. importance in the value chain, and credit card “While there is consensus about the signifi- companies will have the most important roles, cant value of this opportunity among executives according to business leaders globally. They across geographies and industries, the type and placed telecommunications companies third, size of opportunity varies between developed ahead of specialist online payment players and developing countries depending on depth (eg. PayPal, Boku, Obopay), online service and reach of the financial infrastructure provider giants (e.g. Google, Facebook, in place. We believe that those firms will- Amazon), retailers and technology ing to engage in cross-industry partner- companies. Among U.S. respondents, on- ships and competition are more likely to line service provider giants placed third, succeed and dominate the market due to followed by specialist online payment the complex set of business relationships players and telecommunications compa- required to deliver mobile payments to a mass nies, which were rated of equal importance, market,” said Matuszak. retailers and technology companies.

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Mobile Payment Methods About the KPMG Global Mobile Payments Survey

Each of these companies’ success can be tied to the The Global Mobile Payments survey examined the prospects for the five current payment methods which leaders, opportunities, advantages and barriers in mobile are battling for a share of the market. The KPMG survey payments, and was carried out by KPMG’s global Infor- respondents, globally and in the U.S., see specialist online mation, Communications and Entertainment practice. systems leading the pack, due to the fact that this method Covering the Americas, Europe, Middle East, Asia/Africa, already has significantly greater penetration than al- and Asia Pacific, the study surveyed 970 business people, ternatives, and its penetration is expected to increase. including 250 in the U.S., in primarily the financial services, Respondents said that specialist online systems have the technology, telecommunications and retail industries. greatest prospect for success, followed by mobile banking, More detailed survey results are available in the report NFC, carrier billing and the “mobile wallet.” 2011 KPMG Mobile Payments Outlook that is available “While KPMG believes that these forms of mobile upon request. In addition, KPMG also has available payment will all gain some traction, our view is that Monetizing Mobile: How Banks are Preserving their Place M-Wallet is one of the most exciting and promising payment in the Payment Value Chain, a separate report based on opportunities. M-Wallet provides the momentum to move data from the survey that focuses on the banking industry’s beyond payments to participate in the entire chain of mobile outlook for mobile payments. commerce, from consideration and brand awareness to purchase after-sales loyalty and care,” said Tudor Aw, Technology Sector Head, KPMG Europe.

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