Payment transactions via mobile phones is set to rocket in Australia with MCommerce due to alter the retail landscape dramatically, it has been claimed.

Mobile payments in Australia grew 14 percent year on year in 2010, with total mobile payments hitting $155 million, according to a new survey commissioned by PayPal.

The report, entitled mCommerce: Secure Insight, was commissioned in partnership with the Autralian Retailers Association, in a bid to get the Aussie retail industry to fully embrace a multi-channel retail strategy.

With the rapid adoption of web enabled mobile devices fuelling consumer demand, Internet enabled phones now account for 65 percent of the total handset market, and more than 68 percent of Australians say they plan to use their mobile handsets for transactions and payments in the near future.

Consumer demand for mobile payments has been evident to Paypal for some time now – 10 percent of its 3.6 million active consumer accounts have completed transactions on mobile devices in the last quarter of 2010  – up from just one percent in 2009.

Frerk-Malte Feller, managing director for PayPal Australia, said: “With the arrival of mCommerce we expect to see more change in the retail industry in the next three years than we have seen in the last decade. 

“In the last quarter, our merchants have enjoyed a 25 per cent month on month increase in total mobile payment volumes. Retailers must embrace mCommerce now or risk being left behind. Australian retailers were late to the eCommerce market and cannot afford to make the same mistake again.”

Jennifer Cromarty, Australian Retailers Association Deputy Executive Director, added that retailers need to address the multi-channel strategy in order to remain competitive in the current retail landscape. 

She said: “Put simply, retailers must have a presence wherever their customers are – be they in store, online or on their mobile phones.”

One drawback to the adoption of mobile commerce has, however, been concerns over payment security on mobiles. More than half of the 165 online shoppers surveyed said they were not convinced by security measures for mobile transactions.

Half of those surveyed also thought the screens on mobile phones are too small, making usability an issue.

However, with the average consumer changing phones every two years, Internet enabled phones may reach 100 per cent penetration by 2013, the study claims, and retailers need to adapt by offering consumers a fully optimised end-to-end mobile experience.

The most popular time for mobile shopping is when consumers are traveling and 76 per cent of consumers cite convenience as the main reason for transacting on the go.

Feller continued: “The mobile device has become such an integral part of our lives that most people would rather leave the house without their wallet than forget their phone. It is highly personal, always connected and always with you.  The opportunities for retailers to create highly personalised and compelling user experiences are endless.”