Mobile payments to increase to USD20 billion by 2005 -- driven by new business models

London-Mobile payments revenues are set to grow dramatically to USD20 billion in 2005 worldwide, according to a new strategic report from ARC Group. This figure represents an annual growth rate of over 100%, and is mainly derived from new types of transaction such as prepaid top up via automatic teller machines (ATMs).

London-Mobile payments revenues are set to grow dramatically to USD20 billion in 2005
worldwide, according to a new strategic report from ARC Group. This figure represents
anannual growth rate of over 100%, and is mainly derived from new types of transaction
such as prepaid top up via automatic teller machines (ATMs).

Current forms of mobile payments include premium SMS messages, which can be
reverse billed or easily charged to subscribers accounts along with airtime. These will
be followed by prepaid top up services, either direct from linked accounts or from ATM
networks. Virtual payments are the next generation of mobile payments, and will be
used for a wide variety of digital content which is purchased remotely online. Finally,
as the retail infrastructure is built out, local point of sale payments (proximity payments)
will begin to develop, allowing mobile users to pay for goods and services in retail outlets
and at vending machines.

The newer generation of ATMs and vending machines will increasingly be able to
communicate with mobile phones, giving consumers the opportunity to gain access to
virtual cash and to build up loyalty bonus points. This will mean a repositioning of the
players in the value chain, with mobile network operators partnering with credit
companies and banks to offer an integrated package of content and payment facilities.

Richard Jesty, lead author of the report says: These new payment trends are already
happening in the Asia Pacific region. Were seeing vending machines that are able to
talk to mobile phones and provide not just canned drinks but personalised city guides and
entertainment information. Mobile ticketing projects are also underway in Japan for
example which will enable travellers to use their phones as season tickets with built in
credit facilities."

Longer term, ARC Group sees the option of being able to use a virtual credit card as
offering significant potential in the macropayments sector (that is for transactions where
the value is over USD15). This may favour the larger credit card operators, which already
have international brands and technical infrastructures and are moving in the direction of
multi-access payment systems. Both Visa and Mastercard are working with the network
operators and banks to test a number of mobile payment methods, ranging from a point of
sale retail system to a server-based m wallet. Combined with new methods of ensuring

that remote transactions are secure, these mobile payment systems will enable virtual
debit or credit cards to be used for local retail payments as well as online purchases on
the internet.
In both the micro and macropayments sectors, new business models are key to growing
the market for mobile services by offering alternative ways for consumers to pay easily,
and for value chain players to share revenues profitably.

Notes to editors:
ARC Group (www.arcgroup.com) publishes in-depth strategic reports and provides
consultancy on wireless internet, wireless technologies and infrastructure, digital
broadcasting, broadband access, telematics and optical communications.

For more information about this report, please contact :
Chrystelle Chalvin, Sales & Marketing Manager, ARC group
Tel: +44 1932 266 917
chrystelle.chalvin@arcgroup.com
http://www.arcgroup.com