Mobile Payment Market Overview

The mobile payment market continues to grow rapidly - there are more and more players, the situation is becoming increasingly confused. We bring to your attention a free translation of an article with techcrunch , in which we will try to clarify the situation by examining the advantages and disadvantages of each participant in this competition.

It seems that every week a new company, start-up or financial institution appears that launches a new method of payment, transfer or conducting transactions using a mobile phone. The question that is in my head when I see another version of mobile payments - how many more ways do we need to make payments using mobile devices?

Dana Stalder of Matrix Partners, former chief operating officer of PayPal, says she gets to know at least one startup with mobile payments on a weekly basis. Matrix Partners previously invested in Zong, a mobile payment company that was acquired by PayPal in 2010. “Over the past three to four years, there have been many innovations related to payments. But recently, due to the proliferation of smartphones in the market, the largest number of companies have been dealing with mobile payments, ”explains Stalder.

Thomas Husson, a mobile payments analyst for Forrester Bank, agrees with Stalder: “A mobile phone connects online and offline because this device is in everyone’s pocket,” he explains. “Mobile payments are a complex industry made up of many different categories when it comes to payments.”

Perhaps you know the main players in the mobile payment market. But what will bring stability to these competing technologies? There is a company Square working with both consumers and sellers, accepting credit card payments via mobile phone. Add to that Square rivals such as VeriFone and Intuit GoPayment, iZettle, mPowa and the Square analogue of Samwer brothers, trying to replicate Square's success, but in Europe.

In addition, there is a Google wallet based on NFC, and any company working with credit cards, such as American Express (through the Serve service), Visa (V.me) and MasterCard (PayPass). Aisis is a joint venture between AT & T, T-Mobile and Verizon, which aims to create a mobile wallet in devices.

And that's not all! We did not even mention the ever-growing number of startups also playing in this market. The creators of Jumio want to provide payments for retail and is watching the game in the mobile wallet sector. The Braintree and Dwolla payment systems are also trying to make payments by offering mobile transactions for online businesses.

Worth mentioning are Kuapay, Placecast, Boku, AisleBuyer, LevelUp, Groupon, and Shopkick, who try to join the mobile wallet system in a variety of ways.

There is also retail. Starbucks has its own payment application. A number of retailers, including Target and Wal-Mart, are joining together to create their own version of the mobile payment platform.

Of course, Apple’s Passbook can also enter this sector, however, it doesn’t look like a full-fledged wallet, as this is not a launched project. But some airlines have already begun to integrate this technology into their payment acceptance system.

Stalder agrees that "payments outside the companies, amounting to trillions of dollars, were a closed platform, but the mobile phone is changing this view." He suggests that major players are trying to expand the scope of their services and offers to consumers. “It will be hard to beat Google or PayPal.”

But that's not all: PayPal recently outbid competitor Jumio - Card.io service, which allows developers to get hold of credit card information using the smartphone’s built-in camera. Earlier this year, Google acquired mobile payments technology company TXvia. Groupon recently bought up for sale technology company Breadcrumbs and mobile payment company Kima Labs.

I think it is safe to assume that there will not be a single winner in the race for mobile payments and digital wallets. But the consumer is unlikely to want to pay for the products in ten different ways.

So who will win?

One argument is that it will be a company or a startup that can reach the largest number of consumers in a short period of time, with the least difficulty. As Stalder predicts, "he who establishes a relationship with a consumer will gain power."

Hasson believes that the winner’s proposal will include everything necessary for convenience: “Mobile payments by companies are valuable to consumers and merchants not just as payments before the operation, during the operation and after the operation,” he says.

Existing services, such as Square, are becoming more diverse, going beyond consumer operations. Square made a serious bet on customer loyalty, namely, cashless payments, digital punch cards and much more.

SoftTech VC spokesman Jeff Clavier, who was one of Card.io’s first investors, believes that there is more than one winner. In his opinion, banks, credit card holders and others will choose partners offering a payment system via mobile phone independently of each other, which means that their decisions may not coincide.

If customer conquest is key, the importance of trading relationships cannot be discounted. Easier said than done. Square is trying to focus on local and independent merchants, and is also conducting a major deal with Starbucks. PayPal is now associated with a number of major retail stores such as Home Depot and Jamba Juice, but it’s unclear how sales events occur and whether consumers prefer to actually use PayPal when changing credit cards. Google is faced with the features of the NFC system, but until the technology becomes widespread, sellers will have to tight.

Clavier highlights the main problems that companies face in the process of building good relations with both developers and traders: "Your earnings must be competitive ... big companies are fighting for distribution, it confuses startups."

At this stage, we exclude Apple, which could become a major player in the race for mobile payments. But this will only happen if the corporation invests in this product. The reason Apple poses a threat to mobile payments is the sheer amount of personal information obtained from credit cards when purchasing through iTunes. According to recent reports, Apple has 400 million active iTunes credit card accounts.

But Stalder claims that Apple is not a payment company and never will be. He adds that Square has good prospects for this, however, it needs to study the opinions of consumers.

Square has a really good position in the market, but PayPal is fighting hard to squeeze it.

Square and others must identify both sides of the market, as mobile payments are really convenient for both sellers and buyers. Whoever violates this “ecosystem” will find trillions of dollars and all the hardships of competition.

Square and others need to study the market from all sides and prepare for fierce competition - in a market where the bill goes to trillions of dollars, it does not happen otherwise. It is important to understand that the key to success should ultimately be a high level of security and the presence of influential partners such as VISA.