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RESEARCH, ANALYSIS & TRENDS
Innovation, disruption
and consolidation in
mobile payments
expected in 2014
According to the global analyst firm Ovum, there will be tential to be very intrusive if not accurately targeted,
increasing complexity within the mobile payments eco- and the need for precise targeting raises sensitive
system this year, and ongoing challenges around the issues relating to data privacy.
business model for digital wallet services. The net result Although the mobile point-of-sale (mPOS) market is
is that revenue growth for mobile payments in 2014 will here to stay, consolidation in this increasingly
be slow and steady rather than spectacular, at least in crowded, commoditized area is inevitable and will
mature markets. begin in earnest during 2014. Going forward,
mPOS providers will need to achieve scale; this
Ovum expects continued technology and service inno- means addressing larger enterprises, where they
vation, notably around location-based applications, in will have to compete with traditional POS vendors.
the mobile payments space in 2014. However, there are This will be particularly difficult for smaller mPOS
still outstanding issues around consumer uptake and providers – the weaker ones will disappear, and the
use of mobile payments, particularly proximity pay- more promising will be acquired.
ments. There will be a sharp rise in tablet-based mobile
commerce during 2014 and beyond. Consumer
The firm’s key predictions include: adoption of tablets is growing quickly, and their
large screen size and enhanced graphics mean
2014 will not be the year that near-field communica- that they are better suited than smartphones to dis-
tion (NFC) takes off – and neither will 2015. A grow- play visual merchandise.
ing number of alternative enabling technologies are Over the last few years Apple has been putting in
readily available, and at lower cost to merchants place the pieces that in 2014 will see it finally
and consumers. launch a full-fledged, unified mobile payments plat-
There is a chance that hosted card emulation (HCE) form. This will have a positive impact on consumer
could help the case for NFC during 2014. HCE pro- uptake and use of m-payments, but may have a
vides a cloud-based model for NFC that makes ser- negative impact on other players hoping to gain
vice provisioning much easier for issuers, develop- market dominance in the space.
ers, and other third parties. This has the potential to Amazon's big ambitions for mobile, and its reported
open the NFC market to more innovation and com- acquisition of GoPago’s mPOS technology, mean it
petition. However, this will happen only if the card will finish 2014 with a wider and deeper portfolio of
schemes get behind HCE and security concerns are m-payment services.
addressed.
Bluetooth low energy (BLE) will come to the fore, Eden Zoller, principal analyst with Ovum’s Consumer
bringing with it a proliferation in BLE beacon pay- Practice, says: “A key trend for 2014 will be rationaliza-
ment services and hyper-location retail applications. tion and consolidation in the digital wallets space.
However, there is a danger that BLE beacon appli- There has been an explosion in digital wallet launches
cations will be subject to hype that inflates what over the last two years and this is not sustainable. Con-
these types of application can deliver while obscur- sumers will not adopt multiple digital wallets and over
ing their limitations. the next year or so will consolidate their loyalty and
Location-based advertising will be a priority focus in spending into one or possibly two digital wallet ser-
vices. The best-positioned digital wallets will be those
2014, but service providers underestimate the chal- run by the financial and retail brands that consumers
lenges involved. Location-based advertising is right- trust and are familiar with, putting players such as Pay-
ly seen as promising because of the tangible bene- Pal and Visa in a strong position. Wallets of this kind
fits it offers to both retailers and consumers, but it is will be able to achieve scale and attract the advertising
complex and will become more so as location tech- dollars that are needed to bolster the digital wallet busi-
niques and sources of data proliferate. At the same
ness model.” ◊
time, push-based location advertising has the po-
16 Asian eMarketing November 2013 - E-Commerce & Affiliate Marketing
