Wednesday, October 2, 2013

Mobile payment war: Paypal, Square, Venmo

It is very interesting that just a few years ago, mobile payments were still a hot topic but nobody was actually doing that well. When Jack Dorsey founded Square in 2009, every big player started to realize the importance of the traditional POS machine and they started a war.

And Square has been able to make mobile payments simple enough however, compared to traditional channel, the transactional volume is still very low.
Yet with the help of data-mining technology, the POS data possessed through the card readers or the register application provided by either Square or Paypal is so crucial. With the transaction data, the company will be able to analyze the consumer purchase behavior and find useful information.
For example, if you want to open a coffee shop near Carnegie Mellon University, given the sales data on those machines, you can find out where might be the good location for your coffee shop since near every mobile payment system now is location based.
Square also recently launched Square market which is an online curated marketplace for local small businesses. It will definitely take advantage of the mobile payment provided by Square.
Paypal, on the other hand, as a traditional online payment giant, has felt the threat. It accelerated the release of its mobile payments products like it has the exact counterpart credit card reader Paypal here though it sometimes can be very unreliable. Besides, Paypal also plans to launch a new mobile payment product called Paypal Beacon. It facilitates consumers and try to make it even simpler.

As for Venmo, which is a company bought by Braintree last year, is leading mobile payments integrated with social media impacts. By opening the app, you can see your friends paying to others using Venmo. Social is one very difficult part for mobile payments to get in since privacy is the main concern. However, from the current status quo, it seems like Venmo has succeeded. Again, Paypal feels the competition and bought Braintree earlier Sept with 800 million dollars.
As for now, more and more players have come into play. Google wallet is very promising due to its large market share of android OS.
With the business intelligence, the smaller player has a say and starts to grow faster and stronger even if they don't have big market share. While old credit company like VISA etc, they have tons of data while they just sit on the charging the business fees. We can expect a whole new setting in this mobile payments war.


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