Mobile payments market overview

The market of mobile payments continues to grow rapidly - more and more players appear, the situation becomes more confusing. Your attention to the free translation of the article with techcrunch , in which we will try to clarify the situation, having considered the advantages and disadvantages of each participant in this competition.

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

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

Thomas Husson, a mobile payments analyst for Forrester, agrees with Stalder: “A mobile phone connects online and offline because it’s in everybody’s pocket,” he explains. “Mobile payments are a complex industry made up of many different categories when it comes to payments.”
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Perhaps you know the main players in the mobile payment market. But what will give stability to these competing technologies? There is a Square company that works with both consumers and sellers, accepting credit card payments through a mobile phone. Add to this Square's competitors, such as VeriFone and Intuit GoPayment, iZettle, mPowa, and the equivalent Square from Brothers Samwer brothers, trying to repeat the success of Square, but in Europe.

In addition, there is a Google wallet based on NFC, and any company that works with credit cards, such as American Express (via Serve), Visa (V.me) and MasterCard (PayPass). Isis is a joint venture between AT & T, T-Mobile and Verizon that seeks to create a mobile wallet in devices.

And that's not all! We didn’t even mention the ever-growing number of startups playing in this market as well. The creators of Jumio want to provide payments for retailers and watch the game in the mobile wallets sector. Braintree and Dwolla payment systems are also trying to take over payments by offering mobile transactions for online businesses.

It is worth mentioning Kuapay, Placecast, Boku, AisleBuyer, LevelUp, Groupon, and Shopkick, who are trying to integrate into the system of mobile wallets in various ways.

There is also a retail. Starbucks has its own payment applications. 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 may also enter this sector, however, it does not look like a full-fledged wallet, since this is not yet a running project. But some airlines have already begun to integrate this technology into their payment acceptance system.

Stalder agrees that “trillions of dollars in payments outside companies were a closed platform, but a mobile phone changes this view.” He assumes that large players are trying to expand the scope of their services and offers to consumers. "It will be difficult to replay Google or PayPal."

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

I think it’s 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 products in ten different ways.

So who will win?

One of the arguments is that this 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, “whoever establishes a relationship with a consumer will receive power.”

Husson 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 an operation, during an operation or after an operation,” he says.

Already existing services, such as Square, are becoming more diverse, going beyond operations for consumers. Square has made a serious bet on consumer loyalty, namely, non-cash payments, digital punch cards and much more.

The representative of SoftTech VC, Jeff Clavier (Jeff Clavier), who was one of the first investors of Card.io, believes that not only one winner has every chance. In his opinion, banks, credit card holders and others will choose partners who offer a mobile phone payment system independently of each other, which means their decisions may not coincide.

If customer gain is key, the importance of trade relations cannot be disregarded. Easier said than done. Square is trying to focus on local and independent merchants, as well as conducting a major deal with Starbucks. PayPal is now associated with a number of large retail stores, such as Home Depot and Jamba Juice, but it is unclear how sales activities take place and whether consumers prefer to actually use PayPal when changing credit cards. Google faces the features of the NFC system, but until the technology becomes widespread, vendors will have difficulty.

Clavier identifies the main problems that companies face in the process of building good relationships with both developers and merchants: "Your earnings must be competitive ... big companies are struggling to spread, which confuses startups."

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

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

Square has a really good market position, but PayPal is in a tough battle to squeeze it.

Square and others should 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 competition.

Square and others need to study the market from all sides and prepare for tough competition - there is no other way in a market where trillions of dollars are billed. It is important to understand that ultimately, a high level of security and the presence of influential partners, such as VISA, should become key success factors.