Mobile Payments, Who is in Your Smartphone?

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I have been following the mobile payments space since last fall and I am still intrigued by the possibilities it brings to anyone that carries a smartphone.  There are many interesting startups in the space and I have gotten to talk to a couple of smart people last week about what is happening in the space. There is a huge land grab going on right now with companies trying to establish a foothold as one of the leaders. From large retailers establishing a separate company to go after it.  (Merchant Customer Exchange). too many smaller ones like Dwolla, Cimbal, Card.io and of course Square (not so small).

They all have a different spin on how they are approaching it but it all boils down to when will consumers start being comfortable paying for things with a text message, email, NFC or scanning a QR code. I know it is happening right now but it is far from any kind of mass adoption. The consumers have to start using one of these methods enough that they are requiring or strongly suggesting that they use a mobile payment solution. Square has done a good job of getting their white toggle in the hands of thousands of small business owners.  I love Dwolla but I know very few people who actually have a Dwolla account. The companies in the space are taking babies steps to get adoption of the technology by consumers and my guess it will take another 2 years before it is readily accepted to transfer money from your smartphone to a business or another consumer.

But what really excites me about this is the fees. There are a hundred of billions of dollars at stake that lobbyist is trying to protect that are no longer required. This disruption of the 2.5 -4% transaction fees is very much underway. The big boys, Visa M/C are under attack and we will see those fees go to 1% or less in the next 3-4 years.  This is why there are many companies trying to enter this space as there will be more than one winner and there is tons of money at stake.  It looks like the making so of a great battle. Most will watch from outside the ring and few brave ones will enter the ring and fight it out. Go get’em Dwolla and others.



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