• by Steve Smith  @popeyesm, August 16, 2012

Yep, that headline says “trillion.” The forecasting enthusiasm around mobile will not abate. The latest projection of mobile-based payments comes courtesy of Juniper Research. The telecom specialist says that in the next five years the amount of money worldwide flowing through cell phones will reach $1.3 trillion. In a new report, “Mobile Payments Strategies: NFC, Remote Purchases & Money Transfers 2012-2017,” the title pretty much reveals where they think the growth originates for rapid acceleration of the market.

Author Windsor Holden says that in recent months we have been seeing the necessary pieces start to move into place and form the foundation for rapid expansion. Point-of-sale systems from VeriFone, the consortium of carriers and payment providers in ISIS, and a European venture around mobile wallets called Project Oscar are developing apace, the report says.

The main source of revenue growth will be from mobile payments being made for physical goods. More than half of purchases (54%) being made on phones by 2017 will be to buy tangible items that are most likely near at hand. Still, even with rapid growth, m-payments will only account for 4% of purchases in five years. But they will also account for 30% of e-retail by then, Juniper contends.

One of the wild cards in all of this is the arrival of the NFC (near field communications) system that allow contactless payments. The actual rollout of NFC in smartphones has been delayed in part for general lack of interest among consumers and merchants.  A number of payment systems in the U.S., such as PayPal and Square, are evolving without the need for contactless infrastructure at all.

Holden recognizes that while NFC may help grease the market for m-payments somewhat, its adoption has been ragged. “While we are now seeing significant deployments of contactless infrastructure, consumer awareness is extremely low,” he says. “Thus it is imperative for all members of the NFC value chain to engage with the public to heighten its profile as a simple, intuitive payment mechanism.”

Well, let’s just hope that these members of the value chain employ good product development and not just marketing muscle. All we need are relentless ads telling us how effortless tapping our phone can be to make a payment.  Credit/debit cards are not a problem that needs to be solved. And please don’t tell us we are all suffering from unhealthily overstuffed wallets, although we imagine that Jason “George Costanza” Alexander might appreciate the extra work.

What m-payments need are compelling value propositions -- virtual wallets that do more than compile our loyalty cards.