Mobile payments received a timely boost with the launch of the much-hyped Apple Pay function in October 2014, yet for Apple, Google and other m-payment service providers the ultimate goal is to go global. The diverse range of m-payment practices across the world, the existence of dominant regional players, contrasting payment legislations and the differences in consumer access to technology are factors that mean the m-payment majors will have to acquire or at least partner with regional/national players to gain market share. Sell businesses are therefore likely to see a spike in demand for smaller players that hold strong market positions in regions or countries.
Tech majors enter the lucrative m-payment scene en masse
The race for market share in m-payment was given added bite in late 2014, with tech majors Apple and Amazon joining early entrant Google by rolling out their own offerings in the segment. This desire to bridge services in retail and consumer finance can be explained by the rising significance of the mobile device. Consumers are spending more time shopping on their smartphones than ever before, and the digital giants are looking to cash in.
Strong regional players and technological differences provide obstacles to unification
As with their core products, ultimately the goal for the tech giants is to achieve a global presence in the m-payment market, similar to the status offered to bankcard payment operators Visa and MasterCard. However, while one brand can still unify developed markets, the task is much more complex in the more lucrative emerging economies. In China, the world’s largest mobile market, the e-commerce giant Alibaba’s mobile payment service AliPay had a more than 70% share of the market in mid-2014 according to trade sources. In Eastern Europe, the Visa QIWI Wallet service is dominant, while Vodafone’s M-Pesa has a leading position in many African economies.
There are also regional contrasts in how consumers utilize m-payments, which are based on differences in infrastructure and mobile technology access. For example, Eastern Europeans prefer cash-in kiosks, which are public terminals allowing payments in cash or via mobile phone; payments by SMS are common in Africa due to inadequate access to mobile Internet and the continued presence of basic feature phones; and developed markets are pushing NFC due to large investments in digital touch-points.
Key for global dominance is acquisitions and collaborations
The likelihood of one m-payment brand with a truly global reach emerging in the short term is weak. However, unlocking new markets is a possibility for players like Apple and Google if they are willing to acquire local brands. At the very least, they will have to partner up with regional giants. Apple Pay and AliPay, for example, are already considering a partnership in China following talks in October 2014.
The ability to be flexible, both in terms of the platforms used for payments and in adjusting to local legislations, is also vital. At present, Apple Pay is only available on the iPhone 6 models, which are upmarket smartphones that are unlikely to see much mass-market appeal in low-income economies.
Another vital factor is finding the middle ground between appealing to both consumers and merchants. Apple Pay, for example, despite being consumer-friendly is being rejected by major retailers such as Walmart in the USA due to its bankcard-tied system charging retailers a “swipe fee”.
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