If you think the Cola wars were harsh and in your face advertising, wait till the mobile money wallet wars start.
The contenders are Apple Pay, Samsung Pay, Android Pay, Facebook Messenger, PayPal, AliPay and Tencent’s WeChat wallet. The battlegrounds for these wallet wars are North America, Europe, China and India.
With more mobile phones in this world than humans inhabiting the planet, large tech giants and payment companies are going over the next wave – and here I would like to borrow the term I saw on Chris Skinner‘s blog – MoIP – Money Over IP.
Apple Pay started out with the tokenization standard from EMVCo which was launched in March 2014 and made possible for Apple to have card details held securely within the Apple device. Android Pay was not far behind. Samsung Pay bought the company Loop and introduced the induction technology in some of its upscale phones and you can now seamlessly pay anywhere a regular POS machine works.
The wallet wars are just getting started.
Apple is going to be announcing the ability to pay in Safari – making contactless payments over the web a breeze. This would have a huge impact as it now encroaches on the Android domain as well, not to mention, breaks open the fenced area that was restricted to POS machines only for Apple. (See also: Is Paypal Holdings Inc (PYPL) in Trouble with Apple Pay’s Move to Web Browsers?)
Online purchase with your fingerprint would be a reality.
Facebook Messenger (whom if you recall poached David Marcus from PayPal) is readying its Messenger app to be a full-fledged competition to all the wallet players. Added to that, Messenger will have in-app payment capability as well as the ability to pay within the Facebook ecosystem (read this article Facebook Messenger has a plan to challenge Apple Pay).
And if that was not enough going on, PayPal itself is readying to break away from the pure wallet service payments that it does, by looking and using the Venmo hooks to integrate them more with PayPal. In fact recently someone asked the CEO/President of PayPal if Venmo would become a bank – the answer: silence! (draw your own conclusion).
When you look at large incumbent markets (like the US), PayPal is clearly the leader and is being threatened on all fronts. In India, Paytm rules and has yet to fend off any serious competition. Europe is a hodge-podge and clearly does not have a unified wallet leader… yet, albeit, PayPal does come in pretty strong. Then you have China, where two players: AliPay and WeChat rule the marketplace. A marketplace where PayPal, Apple Pay and Samsung Pay are desperate to enter and dominate. Expect tough resistance in this corner of the world.
Last but not least, AliPay has already entered the US market and is in the process of acquiring money transmitter licenses. Tencent/WeChat has yet to enter the US market (maybe it will, maybe it won’t, so far I’m leaning towards that it might not). Asia is a much bigger target for WeChat.
There is a surprise player who can suddenly come into payments – Starbucks. Yes, that’s right. The Starbucks mobile rewards wallet is one of the most used wallets in the US. It is only a matter of time Starbucks will take that extremely large users footprint and go from closed loop to open loop wallet. Boy will that have a disruption effect.
My personal bet is and has always been Facebook. I wrote about it way back about Facebook entering into the payments arena and it will and that too in a big way!
Over the course of the next 12-18 months, the landscape of payments is going to get extremely interesting. With PayPal’s acquisition of Xoom, Venmo and Braintree, expect them to start offering wallet to wallet cross-border payments as easy as PayPal does it for domestic markets.
Apple and Messenger will follow suit. Samsung Pay and Android Pay will have to seriously up their game to be a dominant player in the mobile wallet wars.