The mobile money market in Western Europe is set to grow to between 4 and 5 billion Euros by 2013, according to a new forecast by Frost & Sullivan.

‘Money in Mobile — European Transactions’ examines both the banked and unbanked sectors and segments mobile money into four areas: non-NFC based m-payments, mobile banking, remittance, and NFC based m-payments.

“Solutions targeting the developed world require a long-term strategy, even as providers will need to find a viable solution for retail payments (B2C),” notes Frost & Sullivan principal analyst Sharifah Amirah. “NFC is potentially a solution, but hardware costs and mass market availability still remain key challenges for its widespread adoption. In the mean time, SMS-based services will drive growth.”

Much of the success to date has been primarily on servicing the unbanked mobile subscriber, says Frost & Sullivan. “The global ratio of mobile phone users to bank accounts is about 4:1.5. Remittances between specific markets, for example, Philippines-Hong Kong and India-UAE, have also been very popular.”

“Currently, in the developed world, it is about getting users comfortable — such as, for instance, checking balances and portfolio performances. Operators and banks alike are still building consumer trust in terms of transferring money and paying bills over the phone.”

“Transaction costs and ease-of-use will drive money transfers and P2P transactions,” explaines Amirah. “The gap between financial institutions and mobile operators is beginning to narrow, but there is still need for greater education both on the supply and demand side.”

“Growth will be driven by high frequency and low-value transactions supported by widespread, cashless transaction systems that are cost-effective and secure,” Amirah adds. “Increased cross border cooperation will drive the high growing remittance transactions.”

However, says Frost & Sullivan, five primary concerns remain. These include security issues, the lack of regulation on mobile transactions, quality of service, limited collaboration between different participants and the high cost of solutions.

“Once there is trust, security and greater interoperability, only then will there be growth in proximity transactions and m-commerce,” concludes Amirah.

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