Tech giants like Apple and Google are hard at work on mobile payment services to prepare for growth in the mobile payment marketplace.
For a number of years, mobile industry analysts have predicted a future where mobile payments will be commonplace. Today, mobile payments have grown to a $200 billion market and that figure is projected to more than triple within the next several years as an increasing number of smartphone users are drawn to the speed and convenience of mobile payments. Although most sellers, particularly small retail businesses, don't yet support mobile payment technology, a future where we pay for goods and services primarily with our phones might not be that far away after all.
Needless to say, the major mobile device manufacturers have a major stake in the development of this technology, and all of the major players have developed mobile payment services for use with their smartphones. Google was a frontrunner with its Google Wallet app. In 2014, Apple joined the fray with Apple Pay. PayPal also continues to promote its own mobile payment app, and many larger retailers like Wal-Mart and CVS are working on proprietary payment systems. With the potential market already in the billions, these companies are all jockeying for as big of a share as they can get. Although the principles watch the video at case 5.3 Apple Pay vs. Google Wallet vs. PayPal 2 behind mobile payment are roughly the same, each of these services works in a slightly different way.
Although Google Wallet was first to market, Apple Pay has gotten off to a more promising start. Apple Pay works with most major credit cards and even with in-app purchases for many other mobile apps. However, currently, to use Apple Pay both within stores and within apps, you must have either an iPhone 6 or 6 Plus. To respond to Apple Pay, Google rolled out Android Pay. Google Wallet, discussed in the video, has become a peer-to-peer payment system, similar to Venmo. Android Pay is built on the same NFC technology that underpinned Google Wallet and Apple Pay. PayPal offers an alternative that isn't tied to any individual platform, with versions for iOS, Android, and Windows phones. PayPal has the advantage of recognition within the payment marketplace, earned over a period of 15 years processing all types of online payments. PayPal's traditional advantage has been its direct link with checking accounts, which allows it to avoid typical credit card processing fees. PayPal has an opportunity to become the dominant global payment system, usable on all platforms. On the other hand, PayPal has mostly focused on online transactions and online vendors, whereas the other mobile payment systems are primarily concerned with in-person transactions.
With mobile payment systems only just now picking up steam, it's sure to be an action packed next few years as each of these players jockey for position in the booming mobile payments market. There may also be opportunities for other mobile payment revenue streams, such as embedding location-based advertising within mobile payment apps. Harnessing the steady stream of purchasing data generated by an increasing number of mobile payments will only add to the eventual size of this marketplace.
Watch the "Apply Pay vs. Google Wallet vs. PayPal" video clip using the link below and answer the 4 questions following.
The question being asked is:
What are some of the drawbacks of PayPal's mobile app noted in the video? Has this changed today?