Analysis: Mobile payment technology, developing in leaps and bounds

By Sooraj Shah
28 Nov 2011 View Comments
A woman using mobile phone payment in a supermarket

Mobile payments will be in mainstream use by 2016, according to research conducted by Forrester and commissioned by PayPal.

The research consists of interviews with 10 senior executives from UK retailers and other enterprises that had a combined turnover of £85bn in 2010.

Further reading

PayPal's subsequent report based on the survey's findings says that within five years, many consumers in the UK will use mobile phones instead of cash to pay for items in retail stores.

"Major retailers have told us that consumers will be able to comfortably leave their houses without their wallets as there will be a mass adoption of mobile payment technologies," said Rob Skinner, head of PR at PayPal, who was involved in the research.

There are currently three methods of mobile payments available in the UK.

The first is available on mobile devices such as the BlackBerry 9900. It is a Near Field Communications (NFC) chip that can read tags on consumer items and allow shoppers to buy the item. NFC uses wireless technology that allows mobile devices to exchange data within small distances.

In May, NFC was used as part of a Barclaycard launch in collaboration with Orange. The service, QuickTap, allowed NFC-enabled Samsung Tocco owners to tap their phones on to a reader to make payments. The phone stores credit and allows users to pay for items at café chains such as Pret and Eat, in addition to other retail stores.

NFC chips are not yet available on many devices, including Apple's iPhone.

A second service, Simply Tap, was launched earlier this month. The service, provided by the Mobile Money Network, is based on the Monetise payments platform and used by mobile retailer Carphone Warehouse and confectionery store Thornton's, among others.

The service requires customers to register their payment details and delivery address, then insert a code into their mobile phone. The code enables the user to order products from wherever they are.

The final mobile payment option is via mobile apps that allow consumers to purchase items, or pay for their bill.

In June, food chain Pizza Express launched a free app that lets customers pay for their bill through an iPhone. The app can be used in all 370 UK restaurants.

Coffee chain Starbucks also launched an iPhone app last week that can be used in all 700 of its stores to pay for any of its products.

Last week, supermarket chain Asda launched an app that enables its customers to buy groceries online. If in-store, customers can add new products to their baskets by scanning the barcode.

ABI Research forecasts that NFC-based mobile payment users will reach 594 million by 2016, falling in line with the UK retailers' expectations that this will be the most widespread means on payment, as published in the Forrester report.

However, Skinner believes there will be a market for Simply Tap, apps and other mobile payment technologies, too.

"NFC has a role to play but so do the other technologies, and it is likely all three methods mentioned will still have a presence. It is up to consumers to choose which method is best," he said.

Skinner goes on to say that certain retailers may benefit more than others from this technology.

"Mobile payment technology is in the pioneering stage and we still don't know which retailers will benefit most from it. The technology has to give customers something unique and useful.

"Instead of waiting for a waiter to bring over the bill and card reader, paying using your mobile is quicker," he said.

Skinner said that just because PayPal thinks a switchover to mobile payments will occur in 2016 doesn't mean the process of switching has not started already.

"Mobile payments will be deployed in many stores in the next few years, and by 2016 the vast majority will have adopted the technology," he said.

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