It’s getting crowded out there in the mobile payments space.
After years of inactivity, everyone’s woken up to the opportunities
out there, not the least PayPal.
PayPal did nothing in mobile through the 2000s, and I
worried they were missing a huge opportunity to grow their business. In fact, being close to the UK PayPal team,
it was a shock when they pretty much closed their mobile focus in 2008.
Then along came Square.
Square really shook PayPal’s tree.
First they launched PayPal Here, which I think they should
have called Triangle, in 2012:
Then PayPal Checkin, a seamless way of shopping with payment
taken through the air:
And then PayPal Beacon yesterday, a Bluetooth method of
shopping through the air:
So PayPal get mobile now, and it’s not surprising when you
see how many $’s are being transacted through their app.
PayPal’s mobile payment volumes:
2006 Under $1 million
2007 $7 million
2008 $25 million
2009 $141 million
2010 $750 million
2011 $4 billion
2012 $14 billion (10% of Paypal’s total payment volume)
2013 $20 billion (expected)
And this market is predicted to get a lot bigger. According to Gartner, the global transaction volumes
for mobile commerce will exceed $235 billion this
year, up 44% from 2012.
So yes, mobile is hot, hot, hot … but it’s not for many of
the other folks trying to win business in this space. Take note of this Bloomberg article:
Going back to 2008,
venture capitalists have poured $1.4 billion into the market, Rutberg said.
They have little to show for it. The biggest acquisition was eBay’s $240
million purchase of Zong in 2011. Since PayPal, Jack Dorsey’s Square has been the
lone breakout success, achieving a $3.25 billion valuation and an investment
from Starbucks Corp. (SBUX), which uses the payment technology in its coffee
Maybe it’s not suprising that startups with one or two
million dollar venture funding are struggling when PayPal and Google have
invested more than $1.2 billion in their own mobile-payment systems since 2009.
Then it gets interesting, as we see an announcement that
Facebook aims to compete in this space.
Facebook generated a mere $214 million from payments related
revenues in second quarter 2013, and sees a huge opportunity in mobile social
gaming to grow that revenue stream.
The way it will work is that any Facebook user who has their
credit card details stored, will be able to make purchases on mobile apps with just their
Facebook connect signon.
Not forgetting Apple of course: Apple's Latest iPhone Puts
Focus Back on Fingerprint Security.
It makes you wonder what the next decade will hold.
Maybe we will get a few players like Braintree, iZettle, Stripe,
mPowa and Klarna breaking through in this space but, more likely, the Apple’s,
Google’s, Facebook’s and PayPal’s will be the gorillas in this space.
A space to watch closely.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...