Editor’s Note: RCR Wireless News teamed with the Yankee Group to conduct a series of market surveys of RCR Wireless News subscribers to gauge their thoughts on various technology issues. More than 2,600 readers responded to the second wave of surveys. Congrats to Ron Maness, CEO at i-mobile marketing, who won an American Express gift certificate.
U.S. ENTERPRISES are getting ready to invest in mobile transactions infrastructure and services as soon as this year, with a focus on remote commerce, banking and coupon systems, but they are concerned about security and the regulatory environment.
Yankee Group teamed with RCR Wireless News’ enterprise readers to reveal investment priorities. Respondents identified investment priorities and capital investment strategies for the next three years. Surprisingly, 115 respondents, or 26% of the sample, ranked remote mobile commerce (more commonly thought of as mobile shopping) as their top priority for 2008, and mobile coupons were ranked second. These investment priorities highlight how far from near-field communications (NFC) we still are at this stage of enterprise readiness and deployment. 
This joint survey between Yankee Group and RCR Wireless News was conducted in May and June with a sample size of 441. We asked respondents nine questions about their knowledge, their priorities and investments they expect to make in the next three years focused on mobile commerce. This survey specifically focused on mobile payments as they relate to physical transactions at the point of sale (PoS) in retail and transit environments. The respondents to this survey are skewed heavily toward the U.S. market, with 95% of participants residing in the States. The sizes of the companies represented were evenly distributed, but weighted more heavily toward enterprises with 10,000 to 49,000 employees (14%) and 50,000 or more employees (20%).
The applications gaining the most press and buzz have always been mobile banking and contactless payments, so it is somewhat surprising to find that respondents are investing so many dollars in remote mobile commerce and mobile coupons. These two applications are often vendor-led initiatives as opposed to demand-driven by the retailers, whereas the traditional m-commerce applications receiving all of the marketing buzz are led by financial institutions or mobile carriers. Also, the high-profile NFC and contactless payment initiatives receive the branding and marketing support of the largest card associations in the world such as MasterCard, Visa and Discover, as well as support from the enabling technology platform providers. However, when comparing this with findings from the “Yankee Group Anywhere Enterprise – Large: 2008 U.S. Mobile Transactions Survey,” this data is not surprising. The mere fact that mobile marketing is expected to grow from 2.5% to 7.49% of total marketing spend in the next five years, coupled with the fact that mobile coupons and shopping can now launch services with a 3G experience, will increase consumer adoption of these services. This is opposed to the new handset and PoS infrastructure necessary to make NFC a reality.
2009: year for capex investment
RCR Wireless News’ readers from enterprises of all sizes have already begun investing in mobile transactions. A surprising number (33%) of respondents have made significant capex investment in mobile transactions and another 28% expect to invest in 2009. This will be the tipping point for the market. Up through 2008, the focus has been on trials/pilots, and enterprises have been treading lightly before investing significant dollars in development and deployment. That will all change quickly as 2009 will show actual deployments in mobile coupons and remote commerce initiatives. Even though NFC payments received the lowest number of responses for capital investment in 2008, it is quite the opposite in 2009 – 21% of enterprises investing in NFC will be investing in 2009 vs. 13% in 2010 and 2011. The investment spending dips in 2010 and 2011 because respondents will roll out the rest of their infrastructure depending upon specific need. 
Investment will flow from the U.S.
Survey respondents believe that the mobile payments market will receive priority in the United States, the United Kingdom and China. Seeing China as No. 3 for mobile payments is quite surprising. Due to the current penetration and forecasted adoption of credit cards in China, investment in a more developed economy with a high penetration of mobile such as France or Korea would be expected before China. But the potential to grab share in a market with more than 1 billion potential customers is sizable. The “Yankee Group June 2008 Link Data: Global Mobile Forecast” shows that the penetration rate of the Chinese mobile market as a percent of population will grow from 53% in 2008 to 63% by just 2011. More impressive is the sheer scale of subscriber growth, from 533 million in 2006 to 853 million in 2011. 
We also asked survey respondents to rank the importance of a number of topics. The top three most important items when implementing wireless/mobile initiatives are not surprising. Security is always the most important item on any mobile commerce survey, and that stands firm with 74% of respondents making that selection. As enterprises – mainly retailers and financial services companies – begin to investigate the mobile channel, concerns are raised about regulatory issues. Fifty-nine percent of respondents indicated this is the second most important item when implementing a mobile solution. After those two responses, we experienced a significant drop-off. The bulk of responses are very similar, with response rates from 50% to 53% on topics including the complex integration, back-end systems, mobile device limitations and the lack of NFC-enabled PoS infrastructure.
This survey data details the investment priority for retailers with mobile coupons and shopping, and places the commercialization of these services into perspective. Respondents’ expectations for the availability of these services in the next one to three years are somewhat surprising due to the lack of movement in these applications so far; but with no required upgrades to infrastructure and handsets, the rollout of these services can happen quickly. The market expectation was that we would move from mobile banking to NFC; but based upon the challenges facing NFC due to problems with the business model and availability of handsets, it’s not surprising that it has fallen farther down the priority scale.
These challenges are proving difficult to an evolving ecosystem. This ecosystem cannot lose sight of consumers and their adoption drivers as the business models and distribution challenges will be ironed out.
