Mobile Payments Will Hit $1 Billion In 2013, But Still Needs Retailer Commitment

Mobile payments will hit the $1 billion mark this year, market analyst eMarketer said on Thursday (July 11). But that's less than half what eMarketer previously predicted for 2013, according to VentureBeat.

Mobile payment transactions more than tripled from 2011 to 2012, reaching $539 million. But a large majority of those transactions came from a single source: the Starbucks (NASDAQ:SBUX) mobile payment system, which can only be used at the coffee company's stores. In effect, a single retailer is currently driving virtually all growth in mobile payments.

Nonetheless, eMarketer now says the slowdown from its previous predictions is due to "a congested landscape of competing technologies." But it expects mobile payments to reach $54 billion in 2017, making it one of the least optimistic analyst projections. (Gartner predicts $721 billion in mobile payments in 2017, while Yankee Group predicts $531 billion.)

In general, the optimistic assumptions are based on the idea that something—the arrival of Apple (NASDAQ:AAPL) in the market, the ubiquitous NFC phone, the launch of the MCX mobile payments consortium spearheaded by Walmart (NYSE:WMT)—will jumpstart consumers' use of their phones to pay for merchandise in-store.

But that may be overly optimistic too. The Starbucks experience is telling: There's no consortium, no specialized technology, no Apple, just a single retailer that actually committed to mobile payments. No one else has made that commitment, which is why Starbucks owns in-store mobile payments today. There's no meaningful competition from other technologies or third-party vendors. It's all about retailer commitment—which doesn't exist beyond a single coffee chain.

MCX might produce a similar result for Walmart—and other members of the MCX might actually start using the MCX system if it proves out for their biggest competitor.

Until it does, any analyst basing their mobile predictions on any metric other than how many lattes Starbucks sells to customers flashing their phones should probably ease up on the caffeine.

For more:

- See this VentureBeat story
- See this eMarketer news release

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