Mobile Buying Booms in US, Banking in India

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Many U.S. consumers whipped out their smartphones in brick-and-mortar stores to find better deals online last year, tripling mobile shopping revenue in just one year, an ABI Research analyst said Wednesday.

The findings of a newly released report by the firm showed that the relationship between money and mobile devices varies widely from one part of the world to another. Mobile banking grew significantly in India, while Africa, Latin America and some other parts of the world appeared ready to bypass banking altogether in favor of payments handled by mobile operators, according to ABI.

Mobile commerce grew far faster in the U.S. than worldwide last year, vaulting from US$396 million in 2008 to an estimated $1.2 billion in 2009, analyst Mark Beccue said. That was nearly 1 percent of all online commerce, he said. Drawing on information from multiple sources, ABI concluded that many smartphone users went shopping in physical stores, looked at products, checked out deals on the same items online and made a purchase without even going home to log onto a computer.

Some used an emerging class of applications designed to make this easier, including ShopSavvy, a tool for the iPhone and Android platforms that is coming soon to many Nokia devices. ShopSavvy uses the phone's camera as a barcode scanner to identify a product, then directs the user to Web shopping pages for that item.

Shopping on the mobile Web has become especially popular in North America, though in Japan, it already accounts for about 20 percent of online purchases, Beccue said. Worldwide, excluding Japan, mobile commerce grew from about $3 billion in 2008 to $4.4 billion in 2009.

Meanwhile, the number of U.S. consumers using mobile banking more than doubled in 2009, from 4 million to 10 million. That was partly driven by the slumping economy, because many consumers adopt mobile banking to check their balances frequently, Beccue said. In addition, U.S. banks are starting to treat mobile as more than an extension of Web-based banking, with tools such as SMS (Short Message Service).

But mobile banking is most popular in Asia and has made particular gains in India, where much of the country has limited banking infrastructure. Looking to remedy this problem, the Indian government in 2008 started encouraging banks to launch mobile platforms, he said.

"They see mobile banking as a way to accelerate the acceptance of personal financial services," Beccue said. More than half of Asia's mobile banking customers in 2009 were in India.

Worldwide, the number of mobile-banking users grew from 24.4 million in 2008 to 52.1 million in 2009. Half of those users were in the Asia-Pacific region, Beccue said.

ABI expects to see 407 million people worldwide use mobile banking by 2015. But by that time, nearly as many people will be handling their money through their phones without ever opening a bank account: By then, about 405 million people will be using point-to-point payment systems in which the mobile operator takes in and pays out the cash, Beccue said.

Point-to-point payment systems are becoming an important financial platform in countries where most people have never had access to banks, he said.

"In many parts of the developing world, mobile is the most common piece of infrastructure that exists," Beccue said. "In many places, there are more mobile phones than there is running water or electricity."

In late 2007, Safaricom, the dominant mobile operator in Kenya, started a program called M-Pesa. To use it, Safaricom customers give money to the local agent for the carrier, who may be the corner shopkeeper. That money can be used to prepay for phone service but is also used like a bank deposit. When the consumer wants to pay a friend or merchant who is also a Safaricom subscriber, he simply sends an SMS message authorizing the payment. The carrier knows about the transaction and can verify it because it controls the SMS system. The recipient gets the cash in his account and can pick up the cash from another agent of Safaricom.

M-Pesa has taken off partly because a vast majority of Kenyans are Safaricom subscribers, Beccue added. So far, such point-to-point payment systems don't work across carriers. But despite that limitation, the number of people using such systems worldwide roughly doubled last year, from 27.6 million in 2008 to 55.4 million in 2009, according to ABI.

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