Mobile Content: Payments Not Hot, Analysts Say
Despite retailers' enthusiasm for mobile payment, consumers don't want it, providers can't offer it, and technology can't support it, according to Forrester Research
10 May 2001, 1 pm GMT
Market issues will not be resolved in the first half of this decade, limiting mobile payment to 26 billion euros in 2005, conclude Forrester analysts in a new report.
Of the five segments for mobile payment that Forrester analyzed, payment for mobile content will claim nearly half of the 3.2 billion euros in mobile payment gross profit generated over the period.
"While online and brick-and-mortar retailers believe that mobile payment will account for 10% of their transaction value in three years, Forrester believes this is actually at least a decade away," says Michelle de Lussanet, analyst at Forrester "Three barriers will limit the penetration of mobile payment for the next five years:consumers aren't ready to change their payment behavior; providers will continue to resist collaborating on full-featured services; and easy-to-use, cheap, secure, and standardized technology will take years to roll out. Also, European consumers don't trust a mobile payment system and have historically resisted attempts to change their payment habits."
Forrester incorporates these factors into a forecast model of mobile payment in Europe, drawing on consumer spending data from organizations like the ECB and Eurostat.
They project that mobile payment will amount to only 26 billion euros in 2005 - 87 euros per mobile phone user per year - and just 0.5% of consumer spending, excluding housing and vehicle purchase.
While payment for mobile content dominated last year's market, totaling 51 million euros, leadership will shift to low-value mobile payments in the realworld in 2003, like vending machine payments, and finally to higher-value mobile payments such as supermarket grocery payments in 2005. Although stable growth will lead mobile content payment to 5 billion euros in 2005 -- 7.40 euros per user per year -- its share of the mobile payment total will drop from 50% in 2000 to 20% in 2005. Forrester expects only 27 million euros from higher-value payments on the PC-based Internet for goods like CDs. Low-value mobile payment for PC-based Internet content, like pay-per-use news articles will never take off.
Belgium, France, Greece, Luxembourg, and Spain will adopt mobile payment slowest, averaging 3.47 euros per mobile user per month in 2005. Austria, Ireland, Italy, the Netherlands, Portugal, Switzerland, and the UK will see an average of 6.77 euros per mobile user per month in 2005. The Nordic countries plus Germany will lead in mobile payment adoption, averaging 10.90 euros per month in 2005.
"Operator margins of 30% on content services today will drop to 10% in 2005 as competition increases, but volume gains will still yield a gross profit opportunity of 1.4 billion euros from 2000 through 2005," de Lussanet added. "Real-world micropayment will hit nearly 1 billion euros gross profit and ensure that premium margins drop only slightly from 10% today to 7% in 2005. Real-world macropayment will yield 666 million euros over the next six years, and more than half of that will appear in 2005. Internet macropayments will show low returns of 201 million euros over six years. Finally, Internet micropayment is a waste of time and is so small that total gross profit over the period will reach a mere 3 million euros."
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