Major players firm up their mobile payment plans
Solutions for mobile payment developed so far have grown successfully
New products and services have been announced by various providers
Square is a successful provider operating in the United States
iZettle expands beyond the Nordic market
PayPal starts with PayPal Here in the United States
German mail order company Otto plans to launch online payment service called Yapital
For almost two years, companies and start-ups from various sectors have changed the market of mobile payments. Some of the products and services developed by these companies/start-ups have already been successfully placed on the market, and some new solutions have been announced. The current status of development, however, does not reveal whether one of the existing products will prevail with respect to mobile, cashless payments or whether one of the future solutions will pave the way towards mass market adoption.
The mobile payments company Square has established itself on the U.S. market. It provides retailers with a device which they connect to their smartphones (Android or iOS) to read the magnetic stripe of credit cards and make payments this way. Instead of using the device, it is also possible to download an app on the smartphone to enter the credit card data of customers manually. In November 2011, Squarehad more than 800,000 retailers as customers and generated a turnover of more than US-$ 2 billion. Square charges a 2.75% rate per transaction.
PayPal has recently announced that it will launch an own product, called PayPal Here, which is going to be provided only for iOS devices in the United States, Canada, Australia and Hong Kong for the time being. However, there are already plans to extend the service to Android devices and make it available on the European market as well. The fee is 2.7% of the purchase price for every transaction. It will be launched in the near future. PayPal Here is designed to make cashless payments by means of credit cards but also by means of invoices.
In contrast to Square, which focuses explicitly on a clientele that would otherwise not be able to offer its customers to make payments by credit card, PayPal Here also addresses wholesalers. Hence, the system will also be available as terminal at home depot stores.
A situation similar to the one that can be observed in the United States with Square and PayPal Here could also arise in Germany and Europe. The European equivalent to Square is iZettle, which is currently expanding beyond the Nordic market.
The German mail order company Otto has recently announced that it will also launch mobile payment services. Its service is called Yapital and shall provide about the same functions which PayPal is currently implementing with PayPal Here. The objective is to create a comprehensive payment service which integrates online payments as well as cashless payments at stores. However, implementation is still at an early stage at Otto. Otto is currently negotiating with retailers. The launch of Yapital is scheduled for 2013 according to Otto.
The emergence of large, established players such as PayPal and Otto clearly shows that the market of mobile payments enters a new stage. While start-ups, in which large competitors participated to explore the possibilities and limits of the market, have dominated so far, major players now seem to believe that the time has come to take matters in their own hands. Apple’s latest patent iWallet is a good example in this context.