Mobile payment use rises in US

10 July 2012

NEW YORK: Over 30% of US consumers have now utilised mobile commerce tools to make a payment, according to a study.

Data from IDC, the research firm, revealed that over 33% of American shoppers have paid for something using a mobile handset, more than doubling the total recorded last year.

A majority of this audience had previously deployed PayPal Mobile, run by a division of eBay, to complete transactions, with Amazon Payments and Apple's iTunes both on 40%.

"In addition, prepaid cards showed strong growth, particularly in the network branded and benefit submarkets," IDC said.

"Despite the popularity of digital downloads, such as apps and music, more respondents reported buying physical goods with their phones than online services, digital goods, or virtual currency."

Elsewhere, 73.5% of the sample as a whole had used web-based bill payment systems, which have thus become the "dominant way" for undertaking this activity.

Gartner, the insights provider, has previously predicted that mobile payments will reach a value topping $600bn by 2016, versus a projected $172bn in 2012.

To try and exploit this trend, Google, the online giant, rolled out Google Wallet in 2011, initially allowing users with a Sprint Nexus S 4G handset and shoppers possessing a Citi MasterCard to pay for items via near field communications.

AT&T, T-Mobile and Verizon, the telcos, have also joined forces to develop an equivalent system called Isis, while Microsoft is also planning to introduce a similar offering.

By contrast, Apple, the manufacturer of the iPhone and iPad, has adopted a cautious approach. Phil Schiller, its SVP, worldwide product marketing, stated that the current players were "fighting over their piece of the pie, and we aren't doing that."

Nick Holland, a senior analyst at the Yankee Group, agreed with such an assessment, arguing it would take another 18 months for the market to start maturing. "Right now it is just a gold rush," he said.

Despite its comparative hesitancy, Gene Munster, an analyst at Piper Jaffray, asserted that Apple should not be counted out. "Apple is always a comfortable number two," he said. "They let their competitors do their market research for them."

Data sourced from IDC/Wall Street Journal; additional content by Warc staff