Near-field communications (NFC) transaction services are failing to gain traction globally.
This is according to market analyst firm, Gartner, which has reduced NFC payments value by more than 40% due to "disappointing" adoption of the 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.
NFC technology allows shoppers to pay for goods and services by tapping their smartphones against a payment terminal.
Gartner forecasts that NFC will account for only about 2% of total transaction value in 2013 and 5% of total transaction value in 2017. However, the firm says growth is expected to increase somewhat from 2016 when the penetration of NFC mobile phones and contactless readers increases.
The analyst firm predicts that money transfers and merchandise purchases will account for about 71% and 21% of total transaction value in 2013, respectively, making them by far the largest contributors.
Nonetheless, it says, worldwide, people are not purchasing as much because the buying experience on mobile devices has yet to be optimised. People are spending less via mobile devices than via online e-commerce services and at retail outlets. Merchandise purchases account for about 23% of the total value forecast for 2017, Gartner says.
According to Gartner, money transfer value continues to increase because users are transacting more frequently, although at lower values, due to the wider availability of services and transaction costs that are lower than those of traditional bank services.
This makes money transfer a leading use case, one that Gartner forecasts to 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, it adds. 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 who are transacting at higher values originally forecast. Bill payments will account for about 5% of the total value forecast for 2017.
Worldwide mobile payment transaction values will reach $235.4 billion in 2013, a 44% increase from 2012's $163.1 billion, according to Gartner, which notes that the number of mobile payment users worldwide will reach 245.2 million in 2013, up from 200.8 million in 2012.
"We expect global mobile transaction volume and value to average 35% annual growth between 2012 and 2017, and we are forecasting a market worth $721 billion with more than 450 million users by 2017," says Sandy Shen, research director at Gartner.
"Nevertheless, we have lowered the forecast of total transaction value for the forecast period due to lower-than-expected growth in 2012, especially in North America and Africa."
From a regional perspective, says Gartner, Asia-Pacific's transaction value is expected to grow 38% in 2013 to reach $74 billion. Deployments in developed markets such as South Korea and Singapore and in developing markets such as India are expected to 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 $165 billion, it says, adding that Africa's transaction value is forecast to reach $160 billion in 2016.
While Africa will still experience strong growth through the forecast period, companies are still searching for the most suitable business model for mobile money in their local markets.
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