The War of the Wallets, as we call it around here, is one of the hottest emerging markets in the mobile industry. Essentially, companies like Google, Apple, Intiut, Square, and others are all vying to supplant your physical wallet (baby pictures included) with a mobile app. Pretty cool, right? You could also describe this revolution as frightening and inevitable.
Last week our Editor in Chief, Jacob Hall, briefly touched on some the increasingly busy world of mobile payments. Here are the current standings as I see them:
Square recently received an investment of $25 million and an exclusive partnership with Starbucks to continue building out it’s mobile payments platform. Square is a popular payment network that allows small businesses to accept credit cards directly on their iPhone and iPad. The problem with the Starbucks partnership is how to overcome interchange fees on purchases under $10 (the majority of Starbuck’s sales).
Google Wallet recently partnered with Discover to enable its card members to tap and pay for in-store purchases via their mobile device. The partnership is pretty straightforward: Discover gets Google to build its technology platform, and Google gets a huge customer base to help build traction for its payments system.
Apple‘s entry into the world of mobile payments has largely yet to be seen. We’ll have better idea of their plan after Passbook (a new app in iOS 6) has time to marinate.
Microsoft has a complete mobile payments system integrated with its Windows Phone. The problem is: Do you even know anyone who has a Windows Phone? I don’t. Microsoft does have a nice white paper about the impact of mobile payments.
PayPal has been a victim of resting on its laurels, a problem I have strongly recommended to avoid. Have you seen their iPad app? Or rather, lack thereof. I rest my case. In any case, PayPal is still a behemoth in the online payments industry, and has partnerships in place with over 15 major retailers including: Home Depot, Office Depot, and McDonalds (test program in France).
Intuit GoPayment is similar to Square, but doesn’t have as much traction (as far as I can tell). However, Intuit is a pretty agile company and was a case study in Eric Ries’ book The Lean Startup. Expect to see some progress from them.
Dunkin Donuts recently launched their mobile app, and it allows customers to link gift cards and credit cards that can be used to make in store purchases. Customers can also send friends gift cards through the app.
Isis is an app that allows you to store all your card information in its mobile app and pay for purchases at Isis Ready merchants. I had never heard of them until I researched mobile payments for this article.
Venmo, an NYC based app company that lets you split bills with friends was recently acquired by Braintree for $26.2 million. Braintree is a competitor to PayPal, and we can expect some big things from them in the future.
Merchant Customer Exchange (MCX) has yet to release its app, but includes the likes of Wal-Mart, Target, 7-Eleven, Sunoco, Shell, Publix, CVS, Sears, BestBuy, and Lowes (to name a few). Expect MCX to be a major player in the mobile payments market.
Wallaby is another interesting company, though it doesn’t fit neatly on the mobile payments list. Wallaby is the maker of the Wallaby card, a credit card that is linked to all your other credit cards. Wallaby eliminates the need to carry multiple cards (duh), but also automagically selects the best card to use based on your rewards programs. Some cards are better for groceries than gas, and Wallaby knows this. I am lucky enough to be a beta tester, though I haven’t gotten my card yet. When I do, I’ll let you know what I think. I digress.
As it stands now, the mobile payments sector is highly fragmented. We can expect it to remain this way for a while as companies experiment with how to best mobilize our payments. Currently, however, it seems that mobile payments are only going to complicate our lives. Imagine having to use 10 different apps for 10 different stores: you could hardly call that a convenience.
Despite mobile payments getting off to a fragmented start (which I’ll reiterate is good for competition), they all promise the same thing: to make our lives easier. Whether an easier life means a reduction in transaction costs, faster checkout times, or consolidating the amount of junk we have to carry in our pockets, the wide adoption of mobile payment systems stand to benefit all of us. The tradeoff to all of this is security as our mobile devices continue to hold more and more private (financial) information.
In lighter news Big Fish Games Inc., a U.K. app company, recently launched its mobile casino app. Not necessarily mobile payments, but I thought it was interesting nonetheless. In U.K., where regulation is less intrusive, iPhone owners will now be able to play slots for real money while waiting in queue for the Tube. Now if only we could get mobile sports betting apps in the U.S….
Did I neglect to include any rising stars from the list? Stupefy me in the comments below.