Mobile payment is revolutionizing the payments industry, suggests the widespread sentiment among industry insiders and observers.
But plenty of “folklore” exists regarding which countries are at the forefront with mobile-payment technology, exactly how “big” the market is getting in terms of consumer use and how mobile payments will evolve, Theodore Iacobuzio, Global Insights vice president at MasterCard Worldwide, tells PaymentsSource.
As such, MasterCard developed a mobile payments adoption study that analyzes 34 countries to determine their readiness in person-to-person mobile payments, mobile pay at the point of sale and mobile commerce, Iacobuzio says.
Ultimately, MasterCard’s mobile payment readiness index, released May 7, reveals the industry is in the “early days” of mobile-payment technology, Iacobuzio notes. Surprisingly, no single country leads the pack to top countries by a significant amount when it comes to mobile-pay readiness, he notes (see report summary).
“Singapore rates the highest, and Argentina rates the lowest, but no country has gone past the 50-yard line on this, so to speak, proving that it’s the early days for everyone,” Iacobuzio says.
MasterCard researchers established 50 data points, or “inputs,” that cover key aspects of each country, from gross domestic product to cell phone subscriptions per capita, to country regulations and financial services. Researchers used the information to establish six key areas of the study, Iacobuzio explains.
Researchers weighed the areas of a country’s environment, technology infrastructure, financial services, regulations, mobile commerce clusters (degree of integration and willingness of companies to partner) and consumer research about mobile-payment familiarity and plugged them into algorithms to establish a readiness rating between 1 and 100, Iacobuzio says.
In short, the findings suggest that even if a country was strong in the first key aspects of mobile readiness, it still had a long way to go if it was weak in the areas of mobile commerce clusters and consumer familiarity or willingness to use mobile payments, Iacobuzio suggests.
Singapore ranks highest with a 45.6 rating, followed by Canada at 42 and the United States at 41.5; Argentina ranked last with a 22.4 rating, just below Indonesia, which earned a 24 rating.
“No country is near where it could be,” Iacobuzio contends. “No one will get 100 because that would mean mobile-pay devices completely replaced plastic, and that’s not going to happen.”
Global Insights researchers completed the study to help MasterCard customers and others in the payments industry understand where mobile-payment technology development and acceptance stands worldwide, Iacobuzio says.
Nine of 10 markets with the highest consumer-readiness scores are in Asia/Pacific, the Middle East and Africa regions, the report shows. Of the three mobile-payment types emphasized in the research, more consumers had engaged in m-commerce in 71% of the countries surveyed than they did in person-to-person payments or mobile pay at a point of sale.
The MasterCard study confirms mobile payment faces many challenges, especially at the point of sale, in terms of getting consumers to embrace it as an easier, more beneficial way to make payments than using cards, Brian Riley, senior research director and analyst with Needham, Mass.-based TowerGroup, tells PaymentsSource.
“A lot of stuff is going on in the payments industry, such as the MintChip in Canada, that could blow away mobile payments in many ways,” Riley suggests (see story).
The payments industry has many company executives and analysts “very optimistic about mobile payments,” Riley says. But mobile payments likely will not evolve very quickly, he adds.
“My phone is not faster than my swipe [of a card],” Riley says. “So even that argument about mobile pay speeding up the transaction process probably isn’t true.”
Consumers’ security concerns represent the biggest challenge likely facing mobile-payment advancement, Maria Arminio, president of Avenue B Consulting Inc., a Redondo Beach, Calif.-based payments management consulting firm, tells PaymentsSource.
“Mobile doesn’t have the malware protection and firewall protection that a point-of-sale device would have,” Arminio says.
Fraudsters attack the weakest link in a chain, and they likely would target “new things” such as card readers attached to mobile phones, she adds.
Regardless of the various opinions swirling about the status and future of mobile payments, MasterCard conducted the study to clear up fuzzy notions about the technology’s global standing.
“It was not the intent of the report to draw conclusions about the data, but more to just create an accurate picture of the global market,” Iacobuzio says. In addition, it remains nearly impossible to predict a timeline on the continued development of mobile payments based on the report data, he adds.
“All we know for certain is that it is the early days for mobile payments, but each market is like a snowflake, very different from the others,” Iacobuzio says.
Still, Iacobuzio senses the industry is “at a tipping point” when it comes to incorporating mobile payment.
“It’s absolutely true that mobile pay is the most prominent development in the industry since electronic end-to-end authorization and payment closing was established 30 years ago,” Iacobuzio suggests.
“And mobile pay may even be bigger,” he adds.
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