Aug 20 , 2010
IE forecasts 77 percent rise in Canadian m-payment transactions
By Robin Arnfield, News Editor
The total number of mobile payment transactions in Canada will rise from 31.7 million in 2009 to 581.86 million in 2014, predicts Vancouver, BC-based IE Market Research. This represents a compound annual growth rate (CAGR) of 76.7 percent.
During the same timeframe, the total number of Canadian mobile payment users will rise at an 18 percent CAGR from 1.75 million to 4.47 million, IE says. The gross US dollar value of mobile payment transactions will rise at a CAGR of 98 percent from US$571.4 million in 2009 to US$18.9 billion in 2014.
“Our market research model is different from other consultancies,” Nizar Assanie, vice president of research at IE Market Research, tells Payments Business. “Other firms rely on their analysts to make an estimate of the way a market will evolve, based on the analysts’ own views. What we do is to conduct online interviews with consumers, asking them to estimate their spending patterns over a future period of time, then ‘sanity-check’ the resulting forecasts with industry vendors.”
Based on interviews with 600 Canadian consumers, IE Market Research discovered that in 2009 SMS (short message service) text messaging accounted for just over half of all mobile payment transactions in Canada. Near-field communications (NFC), mobile Internet browser/WAP, and Unstructured Supplementary Service Data (USSD) were the other mobile payment technologies in use in Canada.
An SMS mobile payment transaction involves funds being debited via SMS from a user’s prepaid mobile phone account or a linked credit or debit card.
“PayPal Canada uses mobile web browsers to enable person-to-person transfers via a wireless device,” says Assanie. “NFC involves a payment card being stored as an application on a cellphone, turning the phone into a mobile wallet. USSD can be used to enable a mobile phone to make a payment by scanning a SKU (shop-keeping unit) barcode).”
In 2009, prepaid mobile phone account top-ups accounted for just over a third of all mobile phone transactions in Canada, IE Market Research says. Digital content such as games, ringtones or iTunes was the next biggest category, followed respectively by money transfers, merchandise purchases, ticketing and bill payment.
Assanie contrasts the 76.7 percent CAGR for mobile payment transactions in Canada with much higher growth rates his firm is seeing in developing countries such as India. “In Canada, mobile payments is a nice-to-have service, but credit cards and debit cards are accepted ubiquitously, lessening the incentive for consumers to use m-payments,” he says. “However, in a country such as India, it may be very difficult to use a credit card, whereas merchants may be willing to accept payment via SMS text messaging from the shopper’s prepaid mobile phone account.”