Who stands to lose most from the success of mobile payment systems?

By Manish Gupta, CoreCard Software

The payments and media space has been abuzz recently with news about mobile payment and wallet applications. Many established and startup companies from different sectors (technology, mobile networks, payment networks, PoS solution providers, payment terminal hardware makers and payment processors) have all launched their own versions of mobile payment applications. Some notable names in the race for merchant and consumer attention are Google, Isis, Square, GoPago, LevelUp, Paypal, Visa, NCR and Verifone. We will see further aggressive activity in this space resulting from the recent announcement of the Square-Starbucks deal. There are no clear winners at the moment. There is also a debate about whether these new forms of making and accepting payments are even viable in the near term (especially the ones using NFC technology). Irrespective of the clouds of uncertainty, there seems to be huge interest in these new payment systems if the capital investment is anything to go by.

Which players will emerge as winners after the early shake out phase is anybody’s guess. But I believe that the biggest losers will be the daily deal companies such as Groupon (stock already at an all-time low) and Living Social.

This new breed of payment systems has been conceived in post Facebook, Twitter, FourSquare, Groupon era. They understand the inherent value in connecting people (merchants and customers) and utilizing the power (apps, location, alerts, social networks and all time connectivity) of the phones they carry. If observed closely most mobile payment systems (if not all) are attempting to enable two things: 1) providing merchants an ability to accept payments without the use of clunky and costly infrastructure and 2) giving consumers an app which can be used to find merchants and deals, make payments and redeem promotional offers. These payment platforms that connect merchants and consumers (via smartphones) will help merchants to offer targeted promotions, will deliver them to the consumers’ phone and will also facilitate the redemption of the offers. In doing so, they will obviate the need for the daily deal sites and apps provided by the likes of Groupon and Living Social, whose value in generating profits for merchants is already in question. So, in my humble opinion the success of mobile payment platforms (whichever ones prevail) will be the last nail in the coffin of already ailing daily deal businesses.

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