Ed McLaughlin, MasterCard’s head of emerging payments, sat down with Austin Carr of Fast Company to discuss the future of credit cards. “We’re rapidly moving to a world beyond plastic,” said McLaughlin. “In many ways, plastic is just convenient packaging.” The future of on-the-go payments may lie in the hands of near-field communication but unfortunately, adoption and availability have been extremely slow and limited. While NFC technology has been featured in a number of Android devices, MasterCard seems to think it won’t go mainstream until an iPhone is equipped with the mobile payment solution. Read on for more.

“The timeline is always as rapid as it makes sense for consumers,” McLaughlin said. “That’s a combination of having a critical mass of the merchants, which is what you’re seeing right now, and getting devices into the hands of consumers. I don’t know of a handset manufacturer that isn’t in process of making sure their stuff is PayPass ready.” When asked specifically if Apple was one of these manufacturers, McLaughlin stuttered. “Um, there are…like I say, [I don't know of] any handset maker out there,” he said. “Now, when we have discussions with our partners, and they ask us not to disclose them, we don’t.”

Apple has repeatedly shown that it is one of the few consumer electronics companies right now with the ability to transform and create entire industries. Prior to iTunes and the iPod, virtually no one paid for digital music, and media tablets were a non-factor until the iPad. Does the mobile payment industry need Apple to become a mainstream phenomenon? “Well, anytime someone with a major base moves forward, it advances what you’re doing. So of course,” McLaughlin said. “I think as merchants provide these better interfaces for consumers–a better way of transacting–I think any consumer-focused technology provider would want to take advantage of it.”

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Office Depot, the second-largest retailer of office supplies in the U.S., is testing PayPal’s new point-of-sale system in a limited number of locations according to Reuters. “It’s at this point in a small number of stores … because there are still some rough spots in that experience,” said Kevin Peters, president of Office Depot’s North American unit. “There are some limitations on who can use it, service carriers that support that.” PayPal’s new payment method, known as the wallet in the cloud, lets shoppers who have PayPal accounts pay by typing their mobile numbers and PINs at checkout counters. Customers will also be able to pay by swiping a PayPal card and entering a PIN. PayPal started testing in-store payments at 51 Home Depot locations with plans to offer the service at 20 major retailers by the end of the year, however no additional participants have been named. Peters said the company is eager to experiment with anything that helps with faster checkouts, although nothing will be widely available without further testing. “At this point, we are walking very, very slowly. The last thing we want to do is to roll out technology that doesn’t appreciably change the customer experience,” he said.

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Visa is accelerating its efforts to dominate the mobile payment space, Reuters reported on Monday. Visa is no stranger to mobile payments. It began trialing an iPhone NFC payment solution in Europe early this year, has plans to work with Samsung on a system for the 2012 Olympics, and recently announced that it has partnered with ISIS for the development of a mobile payment network in the United States. “As mobile payments and other chip-based emerging technologies are poised to take off in the coming years, we are taking steps today to create a commercial framework that will support growth opportunities,” Visa’s global head of product Jim McCarty told Reuters.

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141.1 million people around the world will make mobile payments this year, a 38.2% increase from last year, Gartner said in a new report issued on Friday. Global mobile payment volume is expected to hit $86.1 billion in 2011, up 75.9% from the $48.9 billion recorded last year. Gartner says mobile payments are not growing as fast as originally projected due to slower than expected uptake in developing countries. In addition, the “complexity of the [NFC]” service model has impeded its ability to takeoff in developed countries. “The biggest hurdle is the need to change user behavior by convincing consumers to pay with mobile phones instead of cash and cards,” Gartner research director Sandy Shen said, noting that mass market adoption of near-field communications (NFC) is at least four years away. Mobile payments will be driven by prepaid top-ups and money transfers, the research firm said. “Thanks to the success of mobile application stores, such as Apple’s App Store, and the efforts in driving mobile sales by major retailers, such as Amazon and eBay, merchandise purchases far outweigh other use cases in developed markets, which include North America and Western Europe,” Shen said. “We predict that in 2011, merchandise purchases will account for 90 percent and 77 percent of all transactions in North America and Western Europe, respectively.” Read on for the full press release.

Gartner Says Worldwide Mobile Payment Users to Reach 141 Million in 2011

Mobile Payments in Developing Markets Growing Slower Than Expected

Worldwide mobile payment users will surpass 141.1 million in 2011, a 38.2 percent increase from 2010, when mobile payment users reached 102.1 million, according to Gartner, Inc. Worldwide mobile payment volume is forecast to total $86.1 billion, up 75.9 percent from 2010 volume of $48.9 billion.

Despite these strong growth projections, Gartner analysts said the mobile payment market is growing slower than expected.

“In developing markets, despite favorable conditions for mobile payment, growth is not as strong as was anticipated. Many service providers are yet to adapt their strategies to local requirements, and success models from Kenya and the Philippines are unlikely to be translated to other markets,” said Sandy Shen, research director at Gartner. While developing markets have favorable conditions for mobile payments, such as high penetration of mobile devices and low banking penetration, this is no guarantee of success, unless service providers adapt their strategies to local market requirements.”

“In developed markets, companies are trumpeting the prospects of Near Field Communication (NFC) without realizing the complexity of the service model. We believe mass market adoption of NFC payments is at least four years away,” Ms. Shen said. “The biggest hurdle is the need to change user behavior by convincing consumers to pay with mobile phones instead of cash and cards.”

Gartner expects Short Message Service (SMS) and Unstructured Supplementary Service Data (USSD) to remain the dominant access technologies in developing markets due to the constraints of mobile phones. Wireless Application Protocol (WAP) will remain the preferred mobile access technology in developed markets, where the mobile Internet is commonly available and activated on the phone. Mobile app downloads and mobile commerce are the main drivers of WAP payments, and WAP will account for almost 90 percent of all mobile transactions in North America and about 70 percent in Western Europe in 2011.

Money transfers and prepaid top-ups will drive transaction volumes in developing markets. These are seen as the “killer apps” in developing markets, where people value the convenience of sending money to relatives and topping up mobile accounts. This is most obvious in Eastern Europe, the Middle East and Africa, where these two services will account for 54 percent and 32 percent of all transactions in 2011.

“Thanks to the success of mobile application stores, such as Apple’s App Store, and the efforts in driving mobile sales by major retailers, such as Amazon and eBay, merchandise purchases far outweigh other use cases in developed markets, which include North America and Western Europe,” Ms. Shen said. “We predict that in 2011, merchandise purchases will account for 90 percent and 77 percent of all transactions in North America and Western Europe, respectively.”

Additional information is available in the Gartner report “Market Trends: Mobile Payments Worldwide, 2011.” The report is available on Gartner’s website at http://www.gartner.com/resId=1714114.

MasterCard announced earlier this week that it would partner with with ISIS to help foster the growth of NFC-based mobile payment solutions in the U.S. ISIS, formed in November last year by Verizon Wireless, AT&T and T-Mobile, intends to deliver a complete mobile wallet solution that ambitiously aims to replace cash, credit cards, debit cards, coupons and more with one comprehensive mobile solution. So we know about ISIS and now we know MasterCard is on board, but MasterCard is hardly a newcomer in the contactless payments space. BGR recently had a chat with MasterCard’s Senior Vice President of Mobile, James Anderson, to discuss the past, present and future of mobile payments here in the U.S. Of course NFC-based contactless payment solutions are at the forefront of discussions surrounding the mobile payment space right now, and who better to discuss NFC with than the man recently named Vice Chairman of the NFC Forum? Our full Q&A with Anderson can be found below.

BGR Interview is a series of interviews and conversations with executives, influencers, tastemakers and innovators, covering the mobile and consumer electronics industries.

You’ve recently been named Vice Chairman of the NFC Forum and you’re becoming a recognized figure in the space. Do you think mobile contactless payments are ready to take off in the U.S.?

I really feel that it’s less a matter of whether the U.S. will be receptive but rather when the technology will hit critical mass. Right now the United States is leading the industry in mobile innovation, and as part of that, payments are becoming very interesting to a number of players. A recent study by Juniper has forecasted that NFC payments will reach $50 billion by 2014. They also predicted that the United States and Western Europe would represent the majority of the market.

Our own research shows that U.S. consumers are ready now. A recent survey MasterCard commissioned revealed that 63% of respondents between 18 and 34 years old were ready to make payments with their cell phones. US consumers are already making purchases via the internet on their mobile phone; contactless will be an extension of that action.

As of March 2011, the CTIA said cell phone penetration now sits at 96% in the U.S. Why has it taken so long for companies to focus on phone-based contactless payments here?

MasterCard has been at the forefront of making mobile phones into contactless devices. Over a decade ago, we worked with Nokia to embed a PayPass chip into phones. We conducted the original contactless payment trials in Orlando and Dallas, working with national merchants at over 80 locations.

Since then we’ve been working, through our own efforts, and through bodies such as the NFC Forum, to line the right players up, behind a common technical approach, supported by open and global standards. We believe now that the right pieces are in place. One of the biggest drivers of interest in the last few years has been the rapid adoption of smartphones. Back in 2001 futurists were talking about the coming power of mobile devices accessing the Internet, but the actual user experience was a long way from the vision. Now in 2011, with the launch of iPhone and the rapid adoption of the Android Operating System, the dreams are turning into a an everyday reality and people are used to the idea of being able to do almost everything on their mobile devices. That creates a very healthy environment to introduce mobile payments, because there is a ready consumer appetite for doing more on the mobile device.

Are cell phone companies adding a layer of complication by coupling NFC with software solutions? How are these solutions better than integrating something like MasterCard’s PayPass, which doesn’t require a battery or on-board software, into cell phones?

I think I’d position that question this way, “How do you compare the advantages of mobile contactless versus card-based contactless payment?” Card-based contactless payments add speed and convenience to the existing user experience of paying with cards. MasterCard has been the leader in deploying PayPass cards to consumers with more than 90 million in circulation. Mobile contactless takes the speed and convenience to the next level, by embedding the capabilities into a device consumers have with them at all times and places. In addition, since it is a computing and communications platform in one, developers and providers can create much richer payment experiences for their customers when they are working with the mobile platform, than is possible with cards.

How do we get around the dead battery issue? Is it overblown?

This is an area where a contactless card currently has an advantage over a phone. A card does not need power because it receives power from the POS terminal. A phone could be configured to perform in the same way — but you would lose many of the features that make it desirable to do a transaction on the phone, such as the control that comes from entering a code before a transaction is completed. Since these control features are important to consumers, MasterCard’s current recommendation is that phone be configured not to perform a transaction when the battery is dead. This recommendation might be modified as consumers gather more experience with the technology.

Security seems to be a major concern. Why do you think this is the case?

Security should always be a concern of consumers when they think about payments. After all — we are talking about money. The good news is that we’ve developed mobile contactless payments with security right at the center; we are not retrofitting it to an existing system. If we were not confident that the system is secure we would not be associating the MasterCard brand to it.

The security can be thought of as layers that protect the integrity of the transaction, and by extension protect the consumer.

(i) We chose NFC technology as the basis for mobile contactless payments because of its very short range (less than 4cm). We wanted to make sure that consumers still made conscious decisions to pay — we don’t want payment happening accidentally.

(ii) We built into the PayPass protocol technology that generates dynamic data every time a transaction is made. This dynamic data means that in the event transaction data is captured by a bad actor, the data has no value.

(iii) We require that the PayPass application on the phone be housed within a tamper-resistant chip known as a Secure Element. It’s the same type of chip that is found on EMV Chip and PIN cards in many parts of the world, and has proven to be a very robust way to protect valuable assets in a highly distributed system.

(iv) Developers of wallet software on the phones often provide an option for consumers to enter a code prior to accessing the wallet.

(v) Once a transaction is made it traverses the MasterCard network, the same network that supports billions of card transactions today, and the consumer is afforded the same protections (e.g., zero liability guarantee) as card-based transactions.

Bottom line: we’re glad when people want to talk about security because MasterCard’s been working on making mobile payments secure for more than 10 years.

Are security concerns the biggest barrier to widespread adoption?

I don’t think so. Today, the fact that consumers can’t walk into a store and buy an NFC phone is the biggest barrier. The great news is that with announcements from industry leaders like Samsung and RIM, that story is going to change very quickly in the next year.

Google used an NFC chip from NXP with built-in security in its Nexus S 4G smartphone. Will similar solutions become an industry standard?

Different companies have taken different approaches to enabling a phone with a Secure Element. In general, network operators prefer to install the payment application in the SIM card. This is the architecture that we just deployed with Orange and Barclaycard in the United Kingdom. Other companies have opted to use an embedded Secure Element (where the Secure Element is added to the phone and is not removable like a SIM. We support that architecture as well as you have seen with the Google program. We embrace solutions that meet our security requirements and that deliver a good user experience. We expect both architectures to continue into the future.

Tell us about MasterCard’s involvement with Google Wallet. Is Google’s product going to be a catalyst in the U.S.?

The founding partners of the Google Wallet — MasterCard, Google, Citi, First Data and Sprint — are in a unique position. With Android, Google has the largest market share for smartphone operating systems in the United States, they have a vast database of information, amazing partnerships and now, working with Citi, MasterCard, First Data and Sprint — a real ecosystem to make contactless mobile payments a reality. All of us understood that we needed to collaborate to make this happen. For MasterCard, we already bring an existing expertise and an infrastructure that has been built on 45 years of transactions and the MasterCard PayPass acceptance network. By using that, consumers will be able to tap and pay at more than 125,000 merchants in the U.S. and more than 300,000 globally. We believe that the combination of our network with the other founding partners’ expertise will help speed up the mobile payments industry in the United States.

It has been rumored for quite some time that Apple is preparing to enter the contactless payment space, perhaps as soon as September when it is expected to launch its next-generation iPhone. As much power and momentum as Apple has, do you think it will become an instant market leader?

Apple is a major technology player with a lot of influence and if they adopt NFC it would be further validation of the technology.

Have you had any discussions with Apple regarding contactless payment solutions?

MasterCard has a 45 year history of innovation in payments and are confident that we will be at the center of delivering the next generation of mobile payments to consumers around the world.

We have partnered with mobile carriers, handset manufacturers and financial institutions globally to launch numerous NFC-payment trials, PayPass mobile payment tags, person-to-person money transfer services, and iPhone/Smartphone Apps that are helping deliver a rich mobile commerce experience for consumers.

Talk to us a bit about interoperability standards. Are we in a place where POS systems and other components are standardized to the point where compatibility of upcoming solutions is a non-issue?

MasterCard is a strong advocate of globally interoperable standards which is why we have invested in PayPass. All existing PayPass merchants around the world are able to accept payments from an NFC phone loaded with a PayPass application. We are working closely with all involved stakeholders (payment terminal vendors, merchants) to increase the number of point of sale terminals able to accept PayPass payments — be they from a card or a phone.

Last but not least, of course: is plastic dead, and are cell-phone based contactless payment systems its executioner?

Plastic is far from dead. We see co-existence of the different form factors for a long period of time. Cards have served the payments industry very well in providing a low-cost platform for the delivery of electronic payment services to a mass market, and displacing cash. The good news is that we are able to carry forward all the strengths of card payments, and make the experience better by embedding it in the mobile phone.

American Express, Discover, MasterCard, and Visa announced a new partnership with ISIS on Tuesday. ISIS is a mobile initiative that was formed in April of last year by AT&T, T-Mobile, and Verizon Wireless in an effort to help foster the growth of using near-field communications for mobile payments. It’s currently being tested in Salt Lake City and Austin. Tuesday’s announcement means that, as the mobile market moves closer and closer to a time when we can actually use our phones to make tap-and-go payments, consumers will have more payment options. MasterCard also teamed up with Google and Sprint on Google Wallet, which will launch in the future for Android-powered smartphones. We’re not sure why Sprint has held out on joining ISIS, but we hope it jumps on board soon to save consumers from a fragmented mobile payment landscape. Read on for the full press release.

Isis Forms Relationships with Visa, MasterCard, Discover and American Express

Isis Becomes the First and Only Mobile Commerce Platform with Full Support of All Four National Payment Networks

Aspen, Colorado — July 19, 2011: Isis, the national mobile commerce joint venture between AT&T Mobility, T-Mobile USA and Verizon Wireless, today announced that Visa, MasterCard, Discover and American Express will join Isis in making mobile commerce a reality for millions of U.S. consumers and merchants. Isis’ relationships with all four payment networks mean that with Isis-enabled phones and payment terminals in place, merchants and consumers will have ubiquity and freedom of choice when it comes to payment network acceptance.

“Since the formation of Isis in November, we have been committed to building a mobile commerce platform that aligns and advances the interests of consumers, merchants and banks,” said Michael Abbott, chief executive officer for Isis. “By working with the nation’s payment networks – Visa, MasterCard, Discover and American Express – we significantly advance the vision of an open and secure platform that provides banks and merchants with a new and highly relevant way to connect with consumers.”

Today’s announcement underscores Isis’ inclusive approach, providing all critical stakeholders – banks, merchants and consumers – with the freedom and choice necessary to foster a robust new industry and make mobile commerce a reality.

“Visa has long championed an open approach to mobile commerce that allows consumers to choose which account they want to enable for mobile payments,” said Joe Saunders, chief executive officer, Visa Inc. “We are committed to working closely with Isis, handset manufacturers, platform providers and financial institutions to offer consumers a suite of mobile services – mobile payments, coupons tailored to location and lifestyle, real time account information and more.”

Earlier this year, Isis announced Salt Lake City, Utah and Austin, Texas as initial launch markets, slated to roll out in the first half of 2012 with support from all four payment networks.

“We fully support an open commerce ecosystem which will drive the scale necessary for widespread adoption of mobile payments, providing consumers with exciting new possibilities for shopping and saving,” said Ajay Banga, president and chief executive officer, MasterCard Worldwide. “Our work with Isis reinforces MasterCard’s commitment to the continued development, innovation and evolution of mobile payments technologies.”

Isis will bring mobile commerce to consumers and merchants by using mobile phones to make point-of-sale purchases through the use of near-field communication (NFC) technology. Isis will offer customers a secure and convenient way to pay, redeem coupons and store merchant loyalty cards, all with the tap of a phone.

“Discover has been working with Isis from the start to facilitate mobile commerce, which will provide added convenience and benefits to consumers while delivering increased loyalty and sales to merchants,” said David W. Nelms, chairman and chief executive officer for Discover. “Isis’ open strategy is the right approach to establishing a highly secure environment for mobile commerce that will be achieved through the participation of banks and payment networks like Discover.”

Since its formation, Isis has had a strong vested interest in generating industry involvement and support for a mobile commerce platform that is open and inclusive by design. By working with all four payment networks, Isis will set the standard for what it means to be open, secure and reliable in the mobile commerce industry.

“Isis is able to bring choice and opportunity to mobile commerce by helping cardmembers bring the cards in their leather wallet onto their mobile device,” said Bill Glenn, president, Global Merchant Services, American Express. “This relationship is another way for American Express to expand the digital experience in the social marketplace. As the line between online and offline continues to blur, American Express is leveraging our digital closed loop to help connect our merchant network with our cardmembers in any environment.”

According to a new study published by Juniper Research, the value of near-field communications (NFC) purchases, mobile-sourced money transfers, and mobile payments for digital and physical goods, will reach $670 billion by 2015. That’s a substantial jump up from the $240 billion Juniper Research has pegged for the total value of mobile payments this year. The research firm said that during the next 18 months, 20 countries will begin deploying NFC payment systems and services; transactions from those services will be in the ballpark of $50 billion by 2014. Most recently, Google announced its Google Wallet and Google Deals services in the U.S., and the search giant has large retail partners on board, including Citi, Subway, Mastercard, Sprint, Macys, and Walgreens. The Far East and China, Western Europe, and North America are the largest mobile payment regions, and those areas “will represent 75% of the global mobile payment gross transaction value by 2015,” the report said. Read on for the full release from Juniper Research.

Mobile Payments Market to Almost Triple in Value by 2015 Reaching $670bn, According to New Juniper Report

HAMPSHIRE, UNITED KINGDOM–(Marketwire – Jul 5, 2011) – A new study from Juniper Research has determined that the total value of mobile payments for digital and physical goods, money transfers and NFC (Near Field Communications) transactions will reach $670bn by 2015, up from $240bn this year. These forecasts represent the gross merchandise value of all purchases or the value of money being transferred.

The new Mobile Payments Strategies report revealed that all segments will exhibit 2x to 3x growth over the next five years. This growth will be driven by the rapid adoption of mobile ticketing, NFC contactless payments, physical goods purchases and money transfers as people in both developed and developing countries use their devices for everyday transactions.

Some 20 countries are expected to launch NFC services in the next 18 months, resulting in transactions approaching $50 billion worldwide by 2014. Meanwhile the need for financial access in developing countries is such that active mobile money users will double by 2013 and drive transaction values accordingly.

Senior analyst David Snow explained: “Our analysis shows that emerging segments such as physical goods payments, NFC and money transfers will fuel market growth by a factor of 2.7 times by 2015. Digital goods is the largest segment and, although forecast to more than double, it is not growing as quickly as some of the newer segments.”

Other key messages from the report include:

• The top 3 regions for mobile payments (Far East & China, W. Europe and N. America) will represent 75% of the global mobile payment gross transaction value by 2015.
• Digital goods payments will account for nearly 40% of the market in 2015.

The study provides the big picture of mobile payments, providing forecasts of the main market segments of digital and physical goods purchases, contactless NFC and domestic and international money transfers and remittances, providing regional forecasts of gross transaction values.

A new Mobile Money Whitepaper and further details of the study, ‘Mobile Payment Strategies: Opportunities & Markets 2011-2015′ can be freely downloaded from www.juniperresearch.com. Alternatively, please contact John Levett at john.levett@juniperresearch.com, telephone +44(0)1256 830001.

Juniper Research provides research and analytical services to the global hi-tech communications sector, providing consultancy, analyst reports and industry commentary.

Verizon Wireless announced a new partnership with Payfone on Monday that will soon allow its customers using phones, tablets, and PCs to make online purchases easier. Once the partnership’s new service is deployed, customers will be able to make more secure purchases online and charge them to their Verizon Wireless bill or use other standard forms of payment. “Our relationship with Payfone complements the part of the mobile payments equation we’re already working on with our Isis joint venture,” said Greg Haller, marketing vice president, Verizon Wireless. “We approach the mobile payments arena from a customer’s perspective. As we move forward, the most important goals will be security, privacy and simplicity. Through our relationship with Payfone, we will be able to quickly offer value to our customers by offering them greater choice and a simple, safe and secure purchasing experience when shopping online from their smartphones, tablets and PCs.” Hit the jump for the full press release.

VERIZON WIRELESS AND PAYFONE POWER NEW MOBILE PAYMENT SOLUTION

New Service Will Allow Verizon Wireless Customers to Make Mobile Payments for Online Purchases from Smartphones, Tablets and PCs

BASKING RIDGE, N.J., and NEW YORK – Verizon Wireless and Payfone, a leading mobile payment processing service, today announced the companies are working together to bring a new mobile payment system to Verizon Wireless customers.  When available, the service will allow Verizon Wireless customers to make online purchases from their smartphones, tablets and PCs using numerous payment methods, including charging purchases to their monthly wireless statements or using traditional payment methods through financial institution partners.

“Our relationship with Payfone complements the part of the mobile payments equation we’re already working on with our Isis joint venture,” said Greg Haller, marketing vice president, Verizon Wireless.  “We approach the mobile payments arena from a customer’s perspective.  As we move forward, the most important goals will be security, privacy and simplicity.  Through our relationship with Payfone, we will be able to quickly offer value to our customers by offering them greater choice and a simple, safe and secure purchasing experience when shopping online from their smartphones, tablets and PCs.”

With Payfone’s unique approach to mobile payments, operators and merchants are able to complete transactions securely and accurately.  Payfone also provides other features important to consumers and merchants, including intelligent routing, pre-authorization and authentication designed to reduce the friction and fraud that affect sales conversion and revenue yield for merchants and operators.

“We are pleased to be working with Verizon Wireless to deliver a new level of convenience, security and flexibility to their customers and to boost revenue and conversion for operators, merchants and publishers,” states Rodger Desai, chief executive officer, Payfone. “This underscores Verizon Wireless’ dedication to cutting-edge innovation as it stays ahead of the mobile payments curve.”

HP is working on phones and tablets with built-in near-field communication (NFC) technology for mobile payments, Bloomberg reported on Monday. Much like Google Wallet, which will soon launch for the Nexus S and eventually other Android devices, HP hopes its customers will be able to use the company’s products to make mobile purchases in retail outlets. Similarly, HP has a plan to create an entire ecosystem where users will be able to to receive coupons or other benefits, such as loyalty points, from NFC-enabled advertisements. While sources told Bloomberg the products could launch by year-end, HP hasn’t been known to deliver new mobile devices to the market very quickly in the past. It’s also still unclear who the company’s mobile payment partners will be.

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Google may have just unveiled its preliminary plans to bring contactless mobile payments to the U.S., but mobile payments in using various technologies are prime to blow up in several other markets around the world as well. Swedish wireless analyst firm Berg Insight on Thursday issued a report on mobile money in emerging markets, and the group believes adoption will skyrocket over the next four years. In 2010 there were 133 million people in emerging markets who used their cell phones to move money or pay for goods and services. That number is set to grow an average of 40% each year to reach 709 million in 2015, the firm believes. Over that same period, the total value of mobile payment transactions will balloon from $25 billion in 2010 to $215 billion in 2015. “In developing regions such as Africa the mobile phone will become the primary digital channel for people to conduct financial services in the coming years,” said Telecom Analyst Lars Kurkinen. “Financial institutions are beginning to realize the importance of mobile phones to reach new clients viewing mobile money services as high-priority strategic projects. Also mobile operators and third party service providers are ramping up their efforts to target the huge unbanked populations in emerging markets.” Hit the break for Berg’s full release.

Berg Insight predicts 709 million mobile money users in emerging markets by 2015

Gothenburg, Sweden – May 26, 2011: According to a new research report by Berg Insight, the number of mobile money subscribers in emerging markets is forecasted to grow from 133 million users in 2010 at a compound annual growth rate (CAGR) of 40 percent to reach 709 million users in 2015. The total value of mobile money transactions will simultaneously grow at a CAGR of 54 percent from US$ 25 billion in 2010 to US$ 215 billion in 2015. Asia-Pacific is expected to become the most important regional market, accounting for more than half of the total user base.

“In developing regions such as Africa the mobile phone will become the primary digital channel for people to conduct financial services in the coming years. Financial institutions are beginning to realize the importance of mobile phones to reach new clients viewing mobile money services as high-priority strategic projects. Also mobile operators and third party service providers are ramping up their efforts to target the huge unbanked populations in emerging markets”, said Lars Kurkinen, Telecom Analyst, Berg Insight. “The number of live mobile money services has thus grown at an explosive rate during the past two years and recently reached as many as 300 commercial deployments.”

The report also identifies mobile international value transfer as a high-growth market and an important revenue source for mobile industry players. Berg Insight estimates that US$ 16 billion worth of international money transfers will be received using mobile phones in 2015, up from less than US$ 1 billion in 2010. Berg Insight also forecasts that international airtime transfers will grow at a CAGR of 67 percent from US$ 130 million in 2010 to reach US$ 1.67 billion in 2015.

During a press conference in New York City today, Google officially took the wraps off of its Google Wallet and Google Offers mobile payment services. Google confirmed that it is working with banks, retailers, and other partners to allow users to make mobile payments with their cell phones. “Your phone will be your wallet,” Google’s VP of Commerce, Stephanie Tilenius, said. “Just tap, pay and save.” Initial partners include Citi, MasterCard, Macy’s, Subway, Walgreens, and Sprint, and trials will begin today with a full launch expected this summer. The search giant said that more than 300,000 merchant locations in the United States will work with Google’s NFC-based mobile payment services, and Google Wallet will automatically apply discounts, loyalty rewards, or coupons at the point of sale. Users can charge up the wallet using a credit card or a prepaid Google card. The firm expects that, by 2014, 150 million smartphones with be enabled with near-field communications (NFC). Google Offers will provide offers based on a user’s location and preferences, and that trial will first occur in Portland and New York.

Google has been working on a mobile payment service for quite some time now, and the company is finally ready to take the wraps off of the first iteration of its contactless payment product. Google has been buying up talent — and someone spilled the beans this past Tuesday — so we can’t say the announcement is likely to come as much of a surprise. Yes, Google is expected to finally take the wraps off its Google Wallet service, which will use NFC-based technology to allow consumers to pay for goods with their cell phones. According to reports, Google’s preliminary pilot will launch in partnership with Sprint, utilizing the NFC-equipped Google Nexus S 4G, and it will be available in New York, San Francisco, Los Angeles, Chicago and Washington, D.C. to start. Want to know more? So do we… and we’ll be reporting all the action as it unfolds right here in this post. Hit the break for our liveblog of Google’s press conference, which will start just before 12:00 p.m. Eastern Time, and don’t forget to refresh the page often for the latest updates!

11:44AM:Ok guys, we're inside and seated. Things look to be moving along well so hopefully we'll start on time in about 15 minutes.

11:52AM:Google hasn't confirmed anything since the event hasn't started yet, but we're surrounded by reps from various banks. 1 + 1 = ...

11:53AM:We've been asked to turn off our phones (and video recording isn't permitted). Things should get started in about 5 minutes.

11:55AM:Beyond Container Store, we've just confirmed that Subway is also going to be a launch partner for the Google Wallet service. Five dollar footlong, anyone?

11:59AM:Ok guys, Google's VP of Commerce is on stage to kick things off.

12:00PM:Google has just announced Google Wallet and Google Offers. The company has issued an open invitation to banks and retailers to partner on both services.

12:00PM:Google's offers and payment platforms will be open.

12:01PM:"Your phone will be your wallet. Just tap, pay and save."

12:02PM:Amazon and eBay started the eCommerce boom in the 90s, and the market will continue to grow as offline companies go online.

12:02PM:Over 70% of consumers transact online. Even still, eCommerce only accounts for 8% of total commerce.

12:03PM:Google is "about to embark on a new era of commerce," merging the offline and online worlds.

12:03PM:Mobile payments will grow four-fold between now and 2014.

12:04PM:...and Google hopes to be a driving force during that boom.

12:05PM:A Mastercard VP is on stage now, discussing the company's leadership in the NFC space. Mastercard was one of the first companies to begin trialling NFC in the US.

12:05PM:Over 300,000 merchant locations is the US are already compatible with Google's NFC-based services.

12:06PM:Over half of US mobile phone users have already used their phones to research and make purchases. That is why Mastercard is so excited to work with Google on Google Wallet and Google Offers.

12:07PM:Google's VP of Commerce is back now.

12:07PM:2011 will begin the age of "mobile local commerce."

12:09PM:Google's combination of services will apply coupons and discounts at the point of sale automatically. Very cool and effortless.

12:10PM:Google says it's just getting started and this is only beginning. Google is teaming up with Citi, Mastercard and Sprint on this initial offering, but more partrners are coming.

12:10PM:Google Wallet trials begin today, and the product will launch this summer.

12:10PM:By 2014, 150 million smartphones will be NFC enabled. This poses a tremendous opportunity for Google's partners.

12:11PM:For funding, Google Wallet currently supports multiple credit cards as well as a prepaid Google card.

12:12PM:The service is extremely secure — it works with Mastercard's paypass service and has a number of security measures.

12:12PM:Macy',s Subway, Walgreens and more will be retail partners right out the gate.

12:13PM:Google Offers, the second product being announced today, is exactly what it sounds like. Offers are delivered based on location and preferences, and the pilot will go live in Portland and New York initially.

12:14PM:Google Offers will also be integrated with a variety of existing Google Services.

12:15PM:Google Wallet will eventually support more than just credit cards. Osama Bedier, Google's VP of Payments is here to explain,

12:15PM:Google has announced a grand vision, but this is also a real product that is already up and running — not just an idea.

12:16PM:He's now demoing the service on stage.

12:16PM:The first thing you have to do when opening the app is attach it to a Google account and enter a PIN.

12:17PM:Next, you can add a credit card — obviously and important step — and then you're ready to go.

12:19PM:He's now covering the security involves with the initial provisioning process. First Data is Google's security partner.

12:19PM:Once a credit card is added, you can only use $100 until it is verified.

12:20PM:Users who don't want to add a credit card can use a Google Prepaid card, which can be funded outside of the Wallet app using any major credit card.

12:21PM:Google has enabled multiple cards in a single secure element, which is an industry first. Similar solutions can only be linked to one card.

12:22PM:A cool feature: Google Wallet functionality can work without even opening the app. It must be set up in preferences, but users will be able to pay with their phones without even opening the app. Very nifty.

12:22PM:A Google engineer is now on stage discussing security.

12:23PM:In terms of hardware, Google is using a secure NXP chip that includes multi-level security features on the hardware and software sides.

12:24PM:The NXP chip is only on (usable) when the Wallet app is unlocked to prevent unauthorized access and usage.

12:26PM:Now we're watching Google Offers in action. Offers can be added directly from a Google search and linked to your account. They'll then be applied to Google Wallet purchases automatically.

12:27PM:Google Wallet can also hold loyalty cards, such as supermarket cards or other store loyalty cards.

12:27PM:American Eagle, a launch partner, is now here to demo an actual transaction using a live POS.

12:29PM:One swipe of the Nexus S register's the loyalty card, any applicable offers or coupons, and the payment information.

12:30PM:Jonathan Wall, one of the founding engineers of this project is on stage now to discuss Google's one-tap functionality (which is also a first in the space).

12:31PM:Google's service will launch will gift cards, loyalty cards and more. Coming this fall, Google will also add a digital receipt feature to eliminate the need for paper receipts.

12:33PM:Another very cool feature: we're now seeing a demo with billboards, in malls for example, that have built-in NFC. A user with a Nexus S can walk by, tap the banner, and any related offers will be transferred to their Google Wallet.

12:34PM:Now we're watching a quick promo video Google put together that showcases some scenarios where the service can be used.

12:36PM:Google is reemphasizing its open invitation. This is just the beginning - Google wants banks, retailers and others to join in developing for this new open platform.

12:38PM:Google said credit cards, loyalty cards, etc are obvious. The company eventually wants users to be able to put everything they would put into a standard wallet into Google Wallet, digitally.

12:39PM:A Citibank VP is on stage now. Citi is proud to be the first bank to join Google on Google Wallet.

12:40PM:Digital money and mobile payments are hugely important to Citi. The bank is a global leader in payments - including digital.

12:42PM:Banking, technology and information are increasingly converging. Google Wallet provides Citi customers with a new, state of the art experience and Citi is proud to be at the forefront of this innovation.

12:43PM:Citi is announcing this collaboration for one reason: to help enhance and simplify the shopping experience for its customers.

12:44PM:We're just at the starting point of mobile payments' capabilities. Today's announcement will be looked at as the inflection point - this tech is going from concept to reality.

12:46PM:Ed McLaughlin from Mastercard is on stage now. "Mastercard is at the heart of commerce," and being involved with this project was imperative for the company.

12:46PM:Mastercard is leading the way in the design, standards and certification process for mobile payments.

12:47PM:NFC payments offer a fundamentally better experience, and consumers will never be able to go back once the try it.

12:48PM:Ed Labry, President of First Data is on stage now. He says the introduction of NFC payment systems integrated with mobile was an inevitability, it was just a question of who would innovate and bring it to market.

12:50PM:First data is one of the largest payment processing companies in the business. It processes 40 billion transactions each year.

12:51PM:80% of the POS systems in the US are provided by First Data, and 50% of transactions are processed by the company.

12:53PM:Farid Abib from Sprint is on stage now. (sorry, WiFi died briefly)

12:54PM:Adib is discussing Sprint's strong partnership with Google - with the Nexus S 4G, and even services, such as Sprint's unique Google Voice integration.

12:56PM:Sprint is excited to be one of the first carrier partners to be involved with Google Wallet. The carrier will work with its OEM partners in adding NFC to more devices, but the Nexus S 4G is the first phone to work with the platform.

12:56PM:The Nexus S 4G is one of Sprint's top-selling phones, Adib said.

12:58PM:We're wrapping things up now, it appears. We're going to watch a video featuring Google's retail partners that will be involved with Google Wallet from day 1. Subway, American Eagle, Walgreens, The Container Store, and more.

12:59PM:Retailers collectively seem excited about the product because of the cutting edge tech, but also because it simplifies the checkout process and speeds things up.

1:01PM:Ok, we're on to the recap now... Google Wallet blends online and offline, and it helps merchants build stronger relationships with customers.

1:01PM:The service is being field tested now, and it will launch this summer.

1:01PM:That's it folks! We're doing a Q&A session now.

1:03PM:Highlights from the Q&A will be posted as appropriate... First and foremost, Google will not be collecting an interchange fee on these transactions.

1:05PM:What happens if you lose your phone? Google can deprovision all of the cards on the wallet remotely. Also, the card numbers are not accessible - they're stored on the secure NXP NFC chip and cannot be accessed.

1:06PM:What about non-Google phones? Google is open to working with any other manufacturers and it will also supply NFC stickers to phones without integrated chips.

1:07PM:50% of the phones sold in the last 6 months were powered by Android, and Google plans to work with partners to get NFC in all Android phones.

1:10PM:Users will not need to input the pin to use Google Wallet's non-payment functions. Loyalty cards, deals, etc can be used any time as long as the phone is on.

1:11PM:How does Google make money on this? Google is in it to create the ecosystem, and it won't charge transaction fees. It will make money on the offers and other value-adds.

1:11PM:(and the Google Wallet app is free)

1:13PM:What happens if a phone's battery dies? "I think you'll need to use your plastic," Google joked. The answer, by the way, is you're SOL. Payments can't be made if the phone is powered off.

1:15PM:Who has the rights to the data this service will collect? The data is owned by the consumer, and each of the respective partners. Bank data stays with your bank. It's never shared and never routed, and that convenient is never broken.

1:16PM:In terms of Offers data, Google will keep it and use it to deliver more personal offers to users.

1:16PM:Google will be completely transparent with this service. "The consumer owns the data." Consumers will also always have control over any data that is shared with anyone (ie, opt-in)

1:18PM:Ok guys, show's over. Thanks for tuning in!

Sources speaking with Bloomberg claim Google is finally ready to take the wraps off its mobile payment service. According to a new report, Google will host an event on Thursday, May 26th to introduce its new service, which will initially be available only to Sprint subscribers in New York, San Francisco, Los Angeles, Chicago and Washington, D.C. who own the company’s Nexus S 4G smartphone. The system will be NFC-based, and Bloomberg did not specify which retail partners would support Google’s initial offering. Google has made a series of moves leading up to the imminent announcement this week, such as its recent acquisition of stealth Toronto-based start up Zetawire, which had filed a patent for “a payment system, an advertising system, and an identity management system” combined into a single product. While Google’s preliminary offering might not include unique technology such as Zetawire’s, it’s safe to say the Internet giant has a lot in store for us as it enters this emerging space. BGR has not independently confirmed that Google plans to introduce a new payment service, but we have received an invitation to a press event taking place on Thursday and we’ll be on hand to cover it live.

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According to a Bernstein note issued on Monday morning, Apple’s fifth-generation iPhone will not include Near field communication (NFC) capabilities as had been previously rumored on several occasions. NFC, which will be featured in RIM’s 2011 BlackBerry smartphone lineup, allows cell phones and other devices to transmit data wirelessly over short distances. Unlike Bluetooth, NFC connections do not require a pairing process, so NFC is well suited for applications such as mobile payments, as it is currently being used in several markets around the world. In the U.S. at the moment, carriers, manufacturers, banks and other companies are all independently working on various solutions. Without better standards, it will be difficult for the technology to take off in the mass market.

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On Wednesday, Square’s CEO Jack Dorsey announced that the firm’s iPhone credit card reader — also supported by the iPad and iPod touch — is now available in all 235 U.S. Apple Store locations, and online, for $9.95. The mobile payment solution allows business owners to quickly charge for products and services wherever they have an iOS device and a data connection. Square accepts Visa, MasterCard, American Express, and Discover cards, and the company takes a 2.75% cut of every swipe. If you sign up for Square service online, Square says it will send you the first reader for free.

[Via IntoMobile]

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