The worldwide user base for mobile payments is expected to scale past the 108.6 million mark by the end of this year at a yearly growth of 54.5%, says research firm, Gartner. In 2009 the corresponding figure was 70.2 million subscribers.

Gartner highlights that with 108.6 million user base, mobile payment users will comprise 2.1% of all mobile users in 2010.

"We continue to see strong growth in developing markets in Asia, Eastern Europe, the Middle East and Africa for mobile payment, while adoption in North America and Western Europe lags behind due to the plentiful choices of payment instruments that consumers have," said Sandy Shen, research director at Gartner. "Developing markets have found the right formula for mobile money services - functions that users want and an ecosystem that can sustain the service."

"The answer for developed markets, however, remains elusive. The offerings for developed markets will take a different format," Ms. Shen said. "Instead of a point offering for mobile payment, the service needs to be built on top of the existing payment behavior and infrastructure so that users can choose any channel - retail, phone, online or mobile - that suits their context at the moment of payment."

Region-wise Asia Pacific is predicted to be the largest market for mobile payment in terms of user base with 62.8 million users by the end of 2010. This will result in 2.6 % of all mobile users in the region.

In Europe, the Middle East and Africa (EMEA), mobile payment users will total 27.1 million and represent 2.1 percent of all mobile users in the region. In North America, mobile payment users will number 3.5 million and represent 1.1 percent of all mobile users in the region.

The growth in users for mobile payment services is mainly driven by the strong demand for the unbanked and underbanked segments. Regulators in early-adopter markets are also formulating policies to provide better user protection and fight against unlawful financial activities relating to money transfer.

In terms of medium for using mobile payment services, SMS emerges as the most popular medium followed by WAP which is the preferred medium in developed markets.

The concept of Near Field Communication (NFC) payment is however proving to be a failure due to the complexity of dealing with mobile carriers and other ecosystem partners, says Gartner.

According to Gartner, operators in developing markets should review service interoperability to speed market uptake and foster healthy competition. Platform flexibility should also be ensured so that platforms can work with both the bank''s and mobile carrier's systems, and so that it can be readily customized for local deployments.