The Age of mCommerce: $31 Billion in Mobile Transactions by 2016

The idea that a mobile phone is used to make phone calls seems almost quaint.  Today, smartphones are replacing not just your address book, iPod, videogame console and navigation system–they are crucial shopping tools that help us find the right restaurant, comparison shop and, increasingly, replace our credit cards, too.

The worldwide smartphone market grew nearly 20% in the first quarter alone, and developers are rushing to offer brands new realtime options for driving customer engagement and transactions.  Some of the latest reports:

  • Location-based advertising:  The global location-based services market is enjoying strong growth. Revenue is expected to reach US $10.3 billion in 2015, up from $2.8 billion in 2010.   Location-based advertising will generate more than 60% of that revenue in 2015, a big shift from today, when navigation applications are still the biggest revenue generator.  (Pyramid research)
  • App Commerce: IDC forecasts the number of annual mobile app downloads will increase from 10.7 billion in 2010 to nearly 183 billion by 2015.  Developers will focus increasingly on in-app purchasing and advertising to fund business models, vs. charging for the app itself.
  • From eCommerce to mCommerce:Forrester predicts mobile commerce will account for 7% of all ecommerce sales by 2016.  Total transaction volume will reach reach $6 billion by the end of this year, $10 billion next year and $31 billion by 2016.
  • Mobile Payments: PayPal expects to process $3 billion in mobile payments this year–as much as $10 million in mobile transactions a day, a number that is rising quickly, Laura Chambers, Senior Director, PayPal Mobile, wrote in blog post.  The company now has eight million customers who regularly make payments using their mobile phone.  And the market is heating up:  Google recently launched its Wallet payment system based on NFC technology (Near Field Communications), which will allow users to make secure, point-of-sale purchases by waving their phones at a NFC reader while checking out at retail locations.   Square allows merchants to process mobile payments through its Reader product.

What do you think?  Are these forecasts too aggressive–or will the market grow faster than the analysts predict?