Mobile Payments Forecast

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                          Mobile Payments Forecast:
               Contactless Evolution Flounders Without
                 Heightened Attention to Merchants
                        And Wireless Carriers


                                                    June 2007




Telephone:       Fax:           Address:                       Email:                        Web site:
925.225.9100     925.225.9101   4309 Hacienda Dr., Suite 380   inquiry@javelinstrategy.com   www.javelinstrategy.com
                                Pleasanton, CA 94588
               Syndicated Report Brochure

               Mobile Payments Forecast:
               Contactless Evolution Flounders Without
               Heightened Attention to Merchants and Wireless Carriers


               Overview
               Mobile banking initiatives combined with the proliferation of contactless payments will lead to
               convergence of payment services through mobile handsets. To realize this convergence, finan-
               cial institutions and payment networks must understand the roles and needs of additional play-
               ers in the value chain—most notably wireless carriers and merchants. Javelin has gathered ex-
               tensive, quantitative, longitudinal consumer data on attitudes toward mobile payments, and has
               created a forecast model for the adoption of contactless payments. Javelin has undertaken an
               extensive analysis of the value propositions of all players to provide an understanding of the crit-
               ical factors that will make contactless and other mobile payments adoption more probable.

               Primary Questions
               •    What is the likelihood of adoption for various mobile payment types—contactless, mobile
                    internet transactions, and mobile person-to-person transactions?
               •    What is the value to each constituent in the value chain and how is that value realized?
               •    What is the role of wireless carriers in the value chain?
               •    What is necessary to attract merchant acceptance beyond “traditional” merchant categories?
               •    How will alternative payment mechanisms affect mobile person-to-person and mobile e-
                    commerce transactions?


               Audience:              Card issuers, financial institutions, payment networks, wireless carriers,
                                      merchants

               Author:                Bruce Cundiff, Senior Analyst

               Contributors:          Stephen Knighten, Research Associate
                                      James Van Dyke, President

               Editor:                Mary Monahan, Editor and Analyst

               Publication date: June 2007

               Price:                 $1200

               Length:                ►32 pages
                                      ►17 charts/graphs




Telephone:         Fax:            Address:                              Email:                        Web site:
925.225.9100       925.225.9101    4309 Hacienda Dr., Suite 380          inquiry@javelinstrategy.com   www.javelinstrategy.com
                                   Pleasanton, CA 94588
               Syndicated Report Brochure

               Mobile Payments Forecast:
               Contactless Evolution Flounders Without
               Heightened Attention to Merchants and Wireless Carriers

               Table of Contents

               Overview ...................................................................................................................................... 3

               Primary Questions ...................................................................................................................... 3

               Findings and Analysis ................................................................................................................ 3

               Executive Summary: Overview of Mobile Payments ............................................................... 4

               Contactless Payments Background: Merchants and Wireless Carriers are Key.................. 6

               Further Action in Spurring Contactless Acceptance Locations is Needed........................... 8

               Determining the Value Proposition for Contactless Payments Constituents ....................... 9

               Merchant Value Proposition is Enhanced with More Dynamic Devices .............................. 11

               Enrollment as an Integral Piece of the Merchant and Carrier Value Proposition ............... 12

               Revenue Models that may Spur Carrier Involvement in Contactless .................................. 13

               Address Consumer Safety Concerns to Spur Consumer Adoption .................................... 15

               Mobile Banking Initiatives and Contactless Payments are Intrinsically Linked ................. 16

               Integrate likely Mobile Banking Customers as Key Targets for Contactless ...................... 16

               Appeal to Contactless Cardholders’ Financial Management and Desire to Interact through
                  Additional Channels ........................................................................................................... 17

               Mobile Person-to-Person Payments Growth Depends on Adoption of Alternatives.......... 19

               Mobile e-Commerce Transactions are Dependent on Handset Evolution and Content In-
                  tegration Efforts ................................................................................................................. 20

               Alternative Solutions Play a Secondary Role in Driving Mobile Payments......................... 21

               Merchant use of Contactless Technology to Drive Alternatives .......................................... 22

               Enhanced Communication and Value adds Post-adoption of Mobile Payments ............... 23

               Wildcard Scenario: Banks as Carriers, and Carriers as Issuers? ........................................ 23




Telephone:        Fax:                     Address:                                             Email:                                         Web site:
925.225.9100      925.225.9101             4309 Hacienda Dr., Suite 380                         inquiry@javelinstrategy.com                    www.javelinstrategy.com
                                           Pleasanton, CA 94588
               Syndicated Report Brochure


               Mobile Payments Forecast:
               Contactless Evolution Flounders Without
               Heightened Attention to Merchants and Wireless Carriers

               Table of Figures

               Figure 1: Sources and Needs for Effective Contactless Growth ............................................ 6

               Figure 2: Projected Adoption of Contactless Through 2012 .................................................. 8

               Figure 3: Value Propositions for Contactless Payments Constituents ................................. 9

               Figure 4: Value From Different Payment Types Among Merchants ..................................... 11

               Figure 5: Contactless Revenue Models for Carriers ............................................................. 13

               Figure 6: Consumer Sentiment Regarding Safety of Contactless Payments ..................... 15

               Figure 7: Likely Mobile Banking Consumers' Reasons for using Contactless ................... 16

               Figure 8: Likely Contactless Payments Users' Reasons for Mobile Banking ..................... 17

               Figure 9: Consumers' Likelihood of Using Mobile Person-to-Person Transfers ................ 19

               Figure 10: Consumer Likelihood of Initiating Mobile E-Commerce Transactions .............. 20

               Figure 11: Opinions on Financial Services via Mobile Devices ........................................... 24

               Figure 12: Likelihood of Accessing Account Information via Mobile Devices ................... 25

               Figure 13: Likelihood of Conducting Financial Transactions via Mobile Device................ 26

               Figure 14: Most Likely Banking Activities Performed via Mobile Devices .......................... 27

               Figure 15: Likelihood of Switching Banks for Mobile Banking Access ............................... 28

               Figure 16: Likelihood of Switching Wireless Carriers for Mobile Banking Access ............ 29

               Figure 17: Opinions on Financial Services via Mobile Devices ........................................... 30




Telephone:       Fax:                Address:                                  Email:                               Web site:
925.225.9100     925.225.9101        4309 Hacienda Dr., Suite 380              inquiry@javelinstrategy.com          www.javelinstrategy.com
                                     Pleasanton, CA 94588
               Syndicated Report Brochure


               Mobile Payments Forecast:
               Contactless Evolution Flounders Without
               Heightened Attention to Merchants and Wireless Carriers

               Companies/Organizations Mentioned in Report
               AT&T                                                      PaymentOne
               ClairMail                                                 PayPal
               Ecrio                                                     Qpass
               Firethorn                                                 Sonopia
               First Data                                                Sprint
               Ibreva                                                    T-Mobile
               mFoundry                                                  Valista
               Mobile ESPN                                               Verizon
               Mobile Lime                                               Virgin Mobile
               Motricity                                                 ViVOtech
               Obopay



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                                   Pleasanton, CA 94588
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Telephone:       Fax:              Address:                              Email:                            Web site:
925.225.9100     925.225.9101      4309 Hacienda Dr., Suite 380          inquiry@javelinstrategy.com       www.javelinstrategy.com
                                   Pleasanton, CA 94588