Louise phelan, vice presdient of Global Customer Solutions & EU Merchant Services at PayPal
The ability to pay for goods using a mobile phone is set to make a huge impact on commerce, both online and offline, writes LAURA O’BRIEN. Gartner research estimates that there will be over 141.1m worldwide mobile payment users in 2011, a 38.2pc leap from 2010.
Mobile payment volume is expected to hit a total of US$86.1bn, up from 75pc from last year.
Online payments firm PayPal has already seen the benefits of mobile commerce, experiencing strong growth within its mobile payments business.
“Three years ago we did about US$25 million of payment volume via mobile. Two years ago that was US$141 million, last year was US$750 million, and this year we expect to do over US$3 billion,” said Louise Phelan, vice president of Global Customer Solutions & EU Merchant Services at PayPal.
“That growth is coming from broader adoption in the consumer base, and it’s moving very quickly into a mainstream consumer audience doing mobile payments. Increasing smartphone penetration is one driver, but also people trying it out and becoming familiar and comfortable with the process.”
There are several models for mobile payments, such as NFC, where a customer swipes their mobile phone over a terminal in store to make an instant purchase. There are also mobile app and web solutions for secure payments.
Another method is the ability to make small payments charged to a customer’s mobile carrier bill, as BoxPAY provides.
Micro-transactions via mobile
“The reason we do that is because we’re aiming at what we call ‘microtransactions’ – anything less than the US$25 mark for mobile games, apps, downloads and content,” said Gavin McConnon, co-founder of BoxPAY.
“At that price, the user really wants a quick transaction and they don’t want to go through the process of entering a credit card number, a billing address and all the security that goes along with paying with a card,” he said.
The model is particularly useful for those without credit cards, particularly within emerging markets, where mobile phone ownership is much more common. It’s also useful to cater for growing ecommerce areas, such as mobile gaming.
“What you’ll see is with the larger game developers now is that they moving their business model from charging a lot of money for a top title game to making it free to play or freemium – in-game purchases,” said McConnon.
“They’re discovering that over the long term they make more revenue from in-game purchases than they do from selling the title as a single purchase,” he said.
The medium of payment is providing numerous new opportunities for customers in terms of choice and conveniences which Irish retailers could soon need to pick up on.
“Irish merchants will need to recognise the importance of having a ubiquitous presence,” said Phelan.
“There is no doubt that with key features such as price comparison and location based shopping being available from a mobile, shopping behaviours will change.
“Consumers can now do a price comparison with the other merchants in the locality or online while shopping for a product in a physical shop all from their mobile phone. So unless you have a mobile presence you will lose the sale to your competitor,” she said.
