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NEW YORK -- The $62 billion alternative payments market will double in the next five years, according to a new Packaged Facts report, entitled "Alternate Payment Systems in the U.S., 2nd Edition." Alternative payments are defined as consumer-to-business and person-to-person payments that are entirely electronic and mostly conducted via the Internet or mobile phones.
Alternative payments rose 25 percent in 2010 compared to a year earlier, according to Packaged Facts. The current $62 billion market has doubled since 2006. But the growth is likely to skyrocket as early as this year, said David Sprinkle, research director and publisher of Packaged Facts. He expects the alternative payments market to balloon to $127 billion by 2015.
"PayPal alone announced $750 million in total mobile payment volume worldwide in 2010 and expects to reach $2 billion for 2011," said Sprinkle. "Though PayPal may be the only player recording that level of mobile payments, several major initiatives either rumored or announced indicate that interest in mobile payments is hitting critical mass. The old school payments paradigm will start losing more and more of the playing field."
Driving the market forward will be three mobile payment introductions or possible launches, said Packaged Facts:
• Google is expected to team up with point-of-sale mobile device makers, VIVOtech and Verifone, to release a mobile payments trial in several cities, allowing this platform to be used by brick-and-mortar retailers.
• AT&T, Verizon and T-Mobile formed the Isis partnership with Discovery Financial and Barclays bank to combine mobile payments and wireless carrier billing into a retail mobile payments solution.
• Rumors abound that Apple will create a mobile payment platform for use on its popular iPhone. The system would mirror the existing iTunes platform and could debut later this year or sometime in 2012.