Africa has led the world in mobile payments from the very start. A lack of wired infrastructure and large numbers of unbanked people with access to mobile phones meant that it was a natural fit. The likes of M-Pesa and Fundamo became household names, processing billions of dollars in transactions every year. But all that is about to change.
Africa is losing its edge in the mobile money game, with the Asia/Pacific region set to steal top spot from it by 2016. According to tech research company Gartner, it will be the largest contributor to the US$235.4-billion in mobile payment transactions set to processed in 2013.
That number represents a 44% increase from 2012 values of US$163.1-billion, with the number of mobile payment users worldwide set reach 245.2-million in this year, up from 200.8-million in 2012.
From a regional perspective, Asia/Pacific’s transaction value is expected to grow 38% in 2013 to reach US$74-billion. This growth has been spurred by the launch of a number of mobile money services in developed markets such as South Korea and Singapore and in emerging markets such as India. These services are expected drive healthy growth in this region. As a result, in 2016, Asia/Pacific will overtake Africa to become the largest region by transaction value, reaching US$165-billion. Africa’s transaction value is forecast to reach US$160-billion in 2016. While Africa will still experience strong growth through the forecast period, companies are apparently still searching for the most suitable business model for mobile money in their local markets.
Both regions are still miles ahead of North America and Western Europe, where transactions are set to be worth US$37-billion and US$29-billion respectively in 2013. North America has been particularly hard hit by the failure of NFC to really take off. In fact, NFC’s transaction value has been reduced by more 40% due to disappointing adoption of NFC technology in all markets in 2012 and the fact that some high-profile services, such as Google Wallet and Isis, are struggling to gain traction.
Gartner reckons that NFC will account for only about two percent of total transaction value in 2013 and five percent of the total transaction value in 2017, although growth is expected to increase somewhat from 2016 when the penetration of NFC mobile phones and contactless readers increases.
Money transfers and merchandise purchases will meanwhile account for about 71% and 21% of mobile transactions in 2013 respectively, making them by far the largest contributors. However, worldwide, people are not purchasing as much because the buying experience on mobile devices has yet to be optimized. People are spending less via mobile devices than via online ecommerce services and at retail outlets. Merchandise purchases account for about 23% of the total value forecast for 2017.
Money transfer value continues to increase because users are transacting much more frequently (although at lower values) due to the wider availability of services and to transaction costs that are lower than those of traditional bank services. This makes money transfer a leading use case, one that Gartner predicts will account for almost 69% of the total value in 2017.
Bill payment value is expected to grow 44% in 2013 and have consistent growth through the forecast period. This is due to higher value per transaction figures as more consumers in developed markets perform bill payments via mobile banking services along with consumers in emerging markets. Bill payments will account for about five-percent of the total value forecast for 2017.