Over the next few years, banks, startups, mobile carriers, and tech titans will compete to make your mobile phone a mobile reality. Any of these companies could theoretically control the multitrillion-dollar U.S. payments industry. Here are the players and how they are positioned now.
Banks – have millions of customers, existing merchant relationships, and of course, most of our money.
Prediction – “They’re risk-averse, and they tend to be technology laggards. I can’t see them innovating here,” says Nick Holland, a mobile tech analyst.
Merchants – To lure consumers, some merchants have launched their own mobile-money platforms. A Starbucks app, for example, lets users load cash onto their mobile phones.
Prediction – Merchants are too self-involved to lead the general charge; it’s more efficient for them to partner with a bigger player, like Google Wallet, says Mark Beccue, a mobile-commerce analyst at ABI Research.
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Prediction – They will get snapped up by the big guys. For example, Punchd and Zong now play for Google and eBay, respectively.
Credit-card companies – Merchants already have thousands of Visa payWave and MasterCard PayPass terminals, which give the credit-card companies lots of leverage if tap-to-pay becomes the mobile-payments standard.
Prediction – Credit card giants don’t interact with customers directly – so they are partnering with bigger players to do that. For example, Visa licenses its payWave tech to Google.
Mobile carriers – experts at processing payments. Recently, AT&T, T-Mobile, and Verizon all joined forces to create Isis, a forth-coming mobile payments network that now touts support from the big four credit-card companies. Sprint linked up with Google Wallet.
Prediction – mobile carriers are not known for major innovation. They have also been mum on the specific of Isis. “Just because there are partnerships does not necessarily mean theres’ anything real there” says David Evans, founder of the tech consultancy Market Platform Dynamics.
Paypal – The leading digital-payments platform boasts 100 million users; $3 billion worth of mobile transactions; a robust suite of fun, useful smartphone apps, and PayPal Access, a Facebook connect feature that aims to streamline the entire virtual – payments process. It is also working on a cloud-based NFC alternative that would allow customers to pay for products by using their phones to scan bar codes for by entering their mobile numbers and a PIN at existing payment terminals.
Prediction – For all of these ambitions to come alive, strong relationships with physical retailers are needed, which has not been a priority for PayPal.
Tech Titans – Amazon and Facebook could easily make plays for the mobile-payments pie. But so far, Google and Apple are leading the way. They’ve got assets aplenty: great relationships with consumers, more pull with physical retailers than PayPal, an active culture of innovation, and, because they both outfit market-leading smartpones, control over when NFC chips could become standard. Most analysts agree that Google Wallet – with its sleek interface, ad-based business model, and rising adoption rate – is a big, bold step in the right direction.
Original article, Mobile Melee, by Philip Butta, appeared in Fast Company, December 2011.