Mobile payments have long been dogged by business model challenges, but according to a recent report momentum is growing and could make that market worth as much as $630 billion in five years — a big number that should grab service providers’ attention.

The report from Juniper Research, “Mobile Payments Markets: Strategies & Forecasts 2010-2014,” found that mobile payment methods are gaining steam in both mature and emerging markets. Through one-on-one interviews and 22 case studies across the mobile payments space, the report explores products and services and how service providers are expanding their offerings — and how merchants and customers are getting more comfortable with mobile transactions.

“When you see someone has bought a boat off of their mobile device and an eBay mobile app, you see the potential for spectacular figures,” said Harold Wilcox, who authored the report.

For service providers, the future of mobile payments and m-commerce has always been heavily tied to business models that must solve the problem of working with so many participants across so many local, state, national and international boundaries.

“You can zoom into something like near-field communications [or NFC, in which devices exchange data over small distances] and realize how difficult it has been to figure out how all stakeholders will fit together—whether mobile operators, ticketing agencies, transport companies, financial institutions—each with its own locations and regulations,” Wilcox said. “It’s taking some time to resolve just how to offer customers the services they want at the price points they want, while ensuring everyone makes what they need to so that it’s all worthwhile,”

But as Juniper’s report shows, real progress is being made on many sides of the globe.

In mature markets, merchants, retailers and financial institutions are developing mobile apps to draw in customers.  For example, across Europe the combination of ticketing and GPS have spurred “take-me-home” apps that tell people how to get home from wherever they are, and GPS in retail has helped merchants to push coupons discounts to mobile phones to lure customers.

In the U.S., for instance, retailer Gap Inc.  has an appthat lets customers peruse various sales and view videos from designers as well as musicians and celebrities. There’s a store geo-locator for shopping on the go, which leverages Gap’s exclusive-to-mobile discounts. The store also increasingly tweets coupons, which users can show a sales clerk from their phones.

Once organizational issues (such as lack of folder systems) and traffic issues on smartphones are resolved,  consumers may use even more apps and more merchants may come on board.

As business models and handsets continue to evolve, technologies such as NFC are expected to further extend the possibilities for m-commerce. Android NFC phones are rumored to arrive this year, and Apple’s newly published patent application talks of NFC as a means to getting devices to share resources within a connected “Apple TV Living Room,” in which iPods, iPhones, Apple TVs, Macs, games controllers, printers, DVRs, projectors cameras and remote controls are paired to share resources such as hardware, software and entertainment products.

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© 2010 Penton Media Inc.

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