44 percent of mobile phone users want to use phones for cash transactions

[March 27th 2002]

Forty-four percent of mobile phone users surveyed in the latest global Mobinet study would like to use their mobile phones for small cash transactions such as transit fees (bus, taxi, train) or items from vending machines, but only two percent have done so. The results of the Mobinet study, a look at global mobile phone use conducted twice annually by global management consulting firm A.T. Kearney and Judge Institute, Cambridge University's Business School, surprised survey experts because the technology for such transactions is not widely known or readily available worldwide.

The study of 5,600 mobile phone users on four continents also revealed that:

-- Short text messaging service (SMS), or "texting" is being used at least once a month by 80 percent of mobile phone users in some European countries to send short text-based messages via their phones

-- The rise in SMS use has led to an explosion in SMS advertising since the last Mobinet study in June 2001.

"Consumer tastes in the mobile arena are fragile, so it is imperative that the community of mobile phone makers, carriers, content providers and financial services companies rally quickly to provide mobile cash capabilities before consumer interest wanes," said Paul Collins, A.T. Kearney principal and leader of the study. "The Mobinet Index recorded high numbers for intent to use mobile phones to access the Internet 18 months ago. Those numbers have fallen drastically, primarily because the mobile community hasn't provided consumers with enough reasons to access the Internet with their phones. Mobile cash could suffer the same fate if consumers aren't soon given compelling opportunities to use it."

One mobile application widely accepted by phone users is SMS, which the latest Mobinet study shows has reached mass-market penetration in some countries. More than 80 percent of mobile phone users in Finland and the United Kingdom report using SMS at least once a month. In Sweden, Singapore, Italy and Germany, once-a-month usage is near 75 percent. Across the 14 countries studied, 35 percent of respondents reported using SMS at least once a day, with once-a-day usage 41 percent in Europe, 33 percent in Asia and five percent in the U.S.

SMS use continues to be most popular among those under age 25 (50 percent use it once a day). However, continuing a trend identified in the June 2001 Mobinet study, SMS use is rapidly spreading to older age groups. Across the 14 countries, 45 percent of 25-34 year olds and 28 percent of 35-44 year olds reported using SMS at least once a day.

"It's clear that SMS has achieved mass market penetration in many countries as its acceptance has spread far beyond the youth market," said L.C. "Mitch" Mitchell, A.T. Kearney vice president and leader of the firm's communications and media practice in the Americas. "This provides a strong foundation for the development and launch of next generation messaging technologies in Europe and Asia, and will likely shorten the growth curve for SMS adoption in the U.S."

Mitchell says the next development path for SMS must be in fostering new uses through transaction-based SMS and introducing new capabilities that replicate the simplicity of SMS, such as multimedia messaging services, location-based services or enhanced messaging services. Indeed, 13 percent of mobile phone users worldwide and 18 percent of users in Europe report having already used transaction-based SMS functions to download ring tones or logos for their phones.

"With consumers becoming increasingly comfortable with SMS, it's inevitable that they'll be looking for the next new thing in mobile services," said Mitchell. "The mobile industry must leverage the successful market penetration of SMS to derive new revenue streams from the expected launch of next generation messaging capabilities."

The rise in SMS use also brought a sharp increase in advertising sent via the capability. Thirty-one percent of respondents in the 14 countries report they've received some sort of advertisement via their mobile phones. In the June 2001 Mobinet, only one percent reported receiving an SMS ad. SMS advertising is most prevalent in South Korea where nearly two thirds of mobile phone users have received an ad. More than 40 percent of users in Germany, China, Taiwan and Finland have received SMS advertising. The two countries with the lowest rate of SMS advertising were Australia, at 19 percent of users and the U.S. at 8 percent.

The study also found that penetration of Internet-enabled mobile phones continues to grow. One third of respondents worldwide reported having an Internet-enabled phone (23 percent in the U.S., 33 percent in Europe, 67 percent in Japan and 29 percent in the remainder of Asia). This is a 41 percent increase from the June 2001 study. However, the number of phone users accessing the Internet with their phones remained flat. With the exception of Japan, the large majority of Internet-enabled phone users have never used the wireless Internet capability on their mobile phones.

"The Mobinet studies are helping us clarify what the term m-commerce will represent," said Professor Chong Choi of Cambridge University. "Contrary to early expectations, m-commerce is not an extension of e-commerce characterized by large volumes of Internet purchases using Internet-enabled mobile phones. It is becoming increasingly clear that m-commerce is more about multimedia messages and using the mobile phone to make payments."

Links
A.T. Kearney		http://www.atkearney.com
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