The number of consumers using mobile devices to make payments will rise dramatically between now and 2005 and mobile carriers could profit from that trend, potentially at the expense of existing financial services providers, according to a study released Tuesday by research firm TowerGroup.

The study predicts that 118 million Western European and 145 users in the Asia-Pacific region will purchase low-cost mobile premium content by 2005. That dwarfs the report's estimate of 22 million such users in North America.

The largest portion of those mobile payments will be for content-related services that cost less than $10 each, which are called micropayments, such as ring-tones for phones or other premium content, the report says. Wireless operators are better suited for such payments than banks and other financial institutions.

The report notes that NTT DoCoMo already is successfully generating revenue in this way and that operator's success should serve as an example for other wireless operators.

There also will be a significant, but much less, use of so-called mobile wallets and other point-of-sale technologies for purchase of larger items. The study predicts 25 million such users in Western Europe by 2005 and 28 million in Asia-Pacific. The study predicts that credit cards will remain, by far, the most common method of payment in North America.

Initially, the micropayments, in which charges are typically added to a user's wireless bill, won't have much effect on standard financial services firms. However, the financial groups could be hurt in the long-term if they don't create alliances with wireless operators to increase opportunities for micropayments. 

However, while operators are best suited for managing smaller payments for content-related items, the financial services groups must be ready to step in to manage slightly higher expenditures in the $5 to $10 price range, the study concludes.

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