Annual mobile transactions are expected to top $235 billion in 2013, which has prompted more than 100 startups/small companies to vie for a piece of the pie. This market is currently dominated by a few, major players (PayPal, Google and Square) and it has been difficult for smaller companies to gain a foothold.
To attract business, smaller companies and startups offer competitive, low transaction rates (i.e. 1% as opposed to 2.5%), and attempt to differentiate themselves by offering services above and beyond simple transaction processing. These companies provide a strong value proposition for the reliable, small business owner who is looking to cut costs, but it is often difficult for them to gain a foothold with customers who want the trusworthiness and reliability of a company name like PayPal.
Additional issues have emerged as smaller companies rush to sign up "anyone and everyone", which leaves them susceptible to risk.
Although there is room in the growing mobile payment market for smaller companies, competition is becoming increasingly fierce, as the major players consolidate and continue to dominate the market. Smaller companies are forced to compete on price (fees) and are often forced to offer transaction rates of 0%, which is obviously not sustainable.
It remains to be seen if the mobile payment market can handle any additional players, and what benefits this competitive dynamic will provide to those who depend on mobile payments to run businesses and pay expenses.
http://www.bloomberg.com/news/2013-08-19/mobile-payment-startups-no-match-for-paypal-tech.html
To attract business, smaller companies and startups offer competitive, low transaction rates (i.e. 1% as opposed to 2.5%), and attempt to differentiate themselves by offering services above and beyond simple transaction processing. These companies provide a strong value proposition for the reliable, small business owner who is looking to cut costs, but it is often difficult for them to gain a foothold with customers who want the trusworthiness and reliability of a company name like PayPal.
Additional issues have emerged as smaller companies rush to sign up "anyone and everyone", which leaves them susceptible to risk.
Although there is room in the growing mobile payment market for smaller companies, competition is becoming increasingly fierce, as the major players consolidate and continue to dominate the market. Smaller companies are forced to compete on price (fees) and are often forced to offer transaction rates of 0%, which is obviously not sustainable.
It remains to be seen if the mobile payment market can handle any additional players, and what benefits this competitive dynamic will provide to those who depend on mobile payments to run businesses and pay expenses.
http://www.bloomberg.com/news/2013-08-19/mobile-payment-startups-no-match-for-paypal-tech.html
No comments:
Post a Comment