More than a trillion dollars will be spent around the world using mobile devices by 2017, according to IDC Financial Insights, although this will still represent only a drop in the commerce ocean.
Most of the money spent using mobile phones will be in the form of e-commerce, says IDC. NFC payments will also start to gain traction as point-of-sale and mobile device technology takes hold, to become the second-largest category, with P2P fund transfers a distant third, mainly due to a lack of common standards.
Despite the huge trillion dollar figure, IDC cautions that this will still be just a tiny fraction - 2.5% - of the total amount of worldwide commerce that is theoretically addressable by mobile payments in 2017.
Whether more of this potential is realised depends on cooperation between financial institutions, mobile operators, and retailers to agree on common standards. If each sector insists on going its own way, mobile payments growth will under-perform its forecast, IDC says; if the market consolidates into a few dominant schemes for each country, then the figure could be much larger.
IDC says that, despite the competition posed by new entrants, the mobile payments outlook for financial institutions is good, with most transactions driven by traditional card products, either through m-commerce or NFC.
As such, financial institutions should view mobile payments as an opportunity to tap the information they possess on their customers' shopping habits and demographic characteristics, argues the analyst firm.
Mobile operators and device manufacturers have given banks unprecedented access to their customers at all times and in all places. To be successful, financial institutions should implement targeted marketing and reward programs because loyalty will be to the company that provides customers with the best value in the form of savings and information.
Financial institutions should also make their cards available for NFC and mobile wallets to capitalise on the growth of m-commerce and contactless payments.
Aaron McPherson, practice director, worldwide payment strategies, IDC, says: "The growing prevalence of smartphones is enabling a variety of mobile payment methods, which combined are becoming a significant share of global commerce. We expect growth rates to continue to accelerate as consumers and retailers become more comfortable with the technology."