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Financial services expected to dominate mobile payments: report

Financial services organizations are expected to dominate the mobile payments and commerce space in 2013, while expectations are diminishing regarding the role that wireless carriers and Google will play in the space, according to a new report from Chetan Sharma Consulting.

Mobile payments will be the breakthrough category in mobile in 2013, according to the 2013 Mobile Industry Predictions Survey from Chetan Sharma Consulting, which takes an insider’s view on what will be the big trends for the year.  Additionally, the number of industry respondents expecting PayPal to play a dominant role doubled compared with a year ago.

“The panelists picked ‘mobile payments’ as the most attractive area with potential in 2013,” said Chetan Sharma, president at Chetan Sharma Consulting, Issaquah, WA.

“It is also clear that the panelists continue to believe that the financial companies will capture the most value from the mobile payments ecosystem and they have grown in strength over the last 3 years,” he said.

Financial services on top
Financial services organizations have been active on the mobile payments front. Visa has a digital wallet, as well as numerous strategic partnerships in place. The company’s strength in mobile payments is illustrated by the fact that consumers picked Visa as the number one choice for a mobile wallet in a fall survey from Javelin Strategy & Research (see story).

Earlier this year, MasterCard teamed up with mobile app shopkick to enable cardholders to qualify for increased rewards through shopkick’s Buy & Collect program. The strategy complements MasterCard’s broader mobile payments strategy that includes PayPass Wallet as well as strategic partnerships with Intel, Isis, Orange, Barclaycard, and Google, among others.

Banks are also stepping up their efforts with regard to mobile payments. The latter part of 2012 and early 2013 saw Bank of America, US Bank and First Trade Union Bank all come out with mobile payments apps and more banks are expected to follow suit this year.

Wireless carriers lose steam
While enthusiasm continues to gain for financial services companies and mobile payments it is waning for mobile payments solutions lead by wireless carriers, such as Isis. Far fewer survey respondents expect wireless carriers to play a dominant role in mobile payments compared with a year ago.

With their access to existing relationships with millions of mobile subscribers, the expectation was that there might be significant growth potential for carriers in mobile payments.

However, Isis – which is a joint venture of AT&T, Verizon Wireless and T-Mobile USA – was delayed a couple of times before it launched in two test markets last fall. In the mean time, others have gained steam and, as a result, carriers may have missed their opportunity.

More survey respondents expect big roles for Amazon and Apple in mobile payments this year while fewer think startups will play a significant role.

While retailers barely registered on the survey, several big names including Walmart are working on their own mobile payments solution, which has the potential to shake up the space if the solution makes it to market this year.

PayPal continues to gain traction in mobile payments, with the company expecting to process $7 billion in mobile payments transactions last year, up from $4 billion in the previous year.

“PayPal will continue to do well and some of the startups are likely to gain more traction than some of the established players,” Mr. Sharma said.

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York