Research house Gartner has forecast that there will be 33 million mobile payment users worldwide in 2008, with the Asia Pacific taking the lead.

Gartner expects this number to triple to 103.9 million users in 2011.

Asia Pacific has the most mobile payment users with a projected 28 million users in 2008, accounting for 85 per cent of the worldwide total. Western Europe is expected to have 499,000 users in 2008, and North America is projected to have one million users.

Banks could capitalize on the upsurge by extending their payment channels, according to Gartner research director Sandy Shen. "Mobile payment systems could bring revenue opportunities for carriers and, potentially, banks, if deployed properly," said Shen.

"The business case is more obvious for mobile carriers than banks; however, banks can justify the investment if they look at mobile as an extension of their existing channels and bundle payments with additional banking services."

Mobile payment defined

Gartner defines mobile payment as paying for a product or service using mobile technologies, such as SMS, Wireless Application Protocol (WAP), Unstructured Supplementary Service Data (USSD) and Near Field Communications (NFC). It excludes telebanking by using a mobile phone to call the service center, as well as mobile ticketing where the ticket value has been prepaid and stored on the phone. The payment is made via the phone, although not necessarily over a wireless network, as in the case of NFC. Examples include merchandise purchase, payment for parking or transit, paying monthly bills and paying for money transfers.

"The service is easier to justify in emerging markets, where many people are unbanked or underbanked, and there are few payment options," Shen said. "In developed markets, mobile payment is likely to start as a loyalty scheme, as an extension of existing services."

However, she warns that banks should be aware of alternative services from non-banking institutions, such as PayPal and Obopay, that can compete on lower fees and faster transactions and that are more pro-active on the mobile front.

"These could threaten the lucrative card business should momentum build up."

Asia Continues to Lead

Shen said Asia leads the world in the uptake of mobile payment and will continue to do so for the foreseeable future.

"There are three main reasons for this, the first being the early launch of such services in the region, led by the Philippines and Japan. Secondly, there are some significant developing markets in the region, such as China and India, with large numbers of mobile users and insufficient banking and payment infrastructure. Thirdly, Asia is ahead of the world in mobile service development due to the receptive attitude of the end user, who is more willing to try new services."

North America and Western Europe will see slower uptake of mobile payment because of the more established nature of the payment infrastructure in those regions and a higher sensitivity to security. However, Gartner expects that the arrival of advanced mobile payment technologies, such as NFC, have the potential to speed up service adoption as consumers associate the "cool factor" and convenience with contact-less mobile payments.