Insight Report: Competition in Mobile Payments – Apple, Samsung, Android, Alipay and PayPal

Developments such as integration of payments into products offered by consumer technology companies, and expansion of contactless technology are encouraging the growth of in-store proximity mobile payments. At the same time, the emergence of one-touch checkout buttons, peer-to-peer payments and the rise of sharing economies have created new opportunities for remote mobile payments.

Apple Pay, followed by the launch of Samsung Pay and Android Pay, has received overwhelming media attention due to its brand recognition. Industry pundits see these events as major milestone in mobile payments. Domestic banks are also expected to become serious contenders in their home markets due to the availability of cost-effective and secure technology such as tokenization and cloud-based host card emulation.

Mobile payments represent a small proportion of total transactions, and this is likely to remain the case. However, large organizations such as Alipay, PayPal, Apple, Google and Samsung are expected to gain traction in the international market. The fact that consumers tend to use several payment methods without necessarily substituting one for another is advantageous.

Nevertheless, growth in mobile payments depends on adoption by all industry participants, including consumers, merchants, card networks, issuers, acquirers, and smartphone developers. The limited success of Google Wallet and Softcard in the US are key examples of how industry-wide cooperation is necessary for the smooth deployment of mobile payments. Google Wallet experienced various setbacks when it failed to gain support from MNOs for using SIM cards.

Both companies failed to achieve a sufficiently large number of early adopters to educate the market on mobile payments. Consumer adoption did not accelerate, as there were limited numbers of merchants that would accept the solutions. Merchants also did not invest in NFC terminals, as they saw consumer adoption as too low.

A significant number of card issuers have entered the mobile payments business with proprietary mobile wallets and P2P payments apps. Mobile wallets are aimed at banks’ clients to improve customer engagement. Initial solutions offered by banks focused on remote payments such as Pingit, and Lime by Axis Bank in India. However, there is growing interest in proximity payments with the growth of HCE technology.

There is no technology with an absolute advantage in technical terms; each has the potential to support a versatile mobile payment solution. However, consumer perception and infrastructure support will play a critical role in deciding preference for one technology over another in different markets.

Scope

• An analysis of the key competitors in remote and proximity mobile payments

• A comparative analysis of various business models in the mobile payments industry

• An examination of the future prospects of the mobile payments industry

• Analyses of the key drivers for creating a successful mobile payment service

• An overview of the future outlook for the mobile payments industry

Key Highlights

Which mobile payment solutions are the global leaders in the mobile payments industry by value of transactions?

Which two platforms are likely to be global leaders in remote payments in the foreseeable future, and are also expected to become serious contenders for in-store payments?

What is forecast to be the scale of the challenge that mobile payments will pose to card payments over the next five years?

What scope is there for global expansion of NFC-based payment solutions? Which factors are likely to hamper global expansion of the NFC? What are payment service providers (PSPs) doing to enable mobile proximity payments as a result?

Why are domestic banks likely to play key roles in mobile payments in their home markets?

Which factors are anticipated to largely impact the direction in which the global mobile payments market will evolve?

Reasons to buy

• Gain an understanding of the current market dynamics of the mobile payments industry

• Analyze changing business models and explore future possibilities of partnerships to grow your market share

• Assess the competitive threats from new entrants in the mobile payments market, and identify emerging opportunities to develop new revenue streams

• Evaluate insights into key success factors, and realign your products and services accordingly

Companies mentioned

Apple

Google

Samsung

Alipay

Tenpay

Vodafone

Safaricom

PayPal

Barclays

Paym

Venmo

Bango

Boku

Seamless

JPMorgan Chase

Uber

Fortumo

BBVA

Starbucks

Commonwealth Bank of Australia

China UnionPay

Table of Contents

1 Executive Summary

2 Defining Mobile Payments

2.1 Overview

2.2 Key Business Models by Solution Providers

2.2.1 Smartphone developers

2.2.2 Payment service providers (PSPs) and platform developers

2.2.3 Card issuers

2.2.4 MNOs

2.2.5 Merchants

2.2.6 Card networks

3 Success Factors for Mobile Payment Solutions

3.1 Support from Stakeholders

3.2 Technological Developments

3.3 Merchant Adoption

3.4 Consumer Adoption

3.5 Regulation

4 The Mobile Payment Competitive Landscape

4.1 Key Operators in Remote Payments

4.1.1 Alibaba

4.1.2 PayPal

4.1.3 Tencent

4.1.4 Vodafone/Safaricom

4.2 Key Operators in Proximity Payments

4.2.1 Apple

4.2.2 Google

4.2.3 Samsung

5 The Outlook for Major Operator

6 The Future of the Mobile Payments Industry

7 Appendix

7.1 Methodology

7.2 Definitions

7.3 Contact GlobalData

7.4 About GlobalData

7.5 GlobalData’s Services

7.6 Disclaimer

List of Tables

Table 1: Mobile Payment Solutions by Fund Source

Table 2: Advantages and Limitations of the Device Manufacturer and OS Provider Model

Table 3: Advantages and Limitations of the Payment Companies Model

Table 4: Advantages and Limitations of Card Issuer Model

Table 5: Advantages and Limitations of the MNO Model

Table 6: Advantages and Limitations of the Retailer Model

Table 7: Advantages and Limitations of the Card Network Model

Table 8: Factors Likely to Encourage Mobile Payments among Key Stakeholders

Table 9: Underlying Mobile Payment Technologies Compared

Table 10: Mobile Payments – Incentives and Concerns for Merchants

Table 11: Incentives to Encourage Mobile Payments among Consumers in Different Income Groups, 2014

Table 12: Levels of Card Security

Table 13: Regulations and their Impact on Mobile Payments

Table 14: Bank-Led Mobile Payment Solutions by Country

Table 15: Zapp in the UK, August 2015

Table 16: Non-Bank Mobile Payment Solutions by Country

Table 17: Android Pay in the US, October 2015

Table 18: Key Competitors at International Level

Table 19: Evaluation of Mobile Payment Solutions using Key Success Factors

Table 20: Key Definitions

List of Figures

Figure 1: Smartphone Developer-Led Mobile Payments

Figure 2: Payment Company-Led Mobile Payments

Figure 3: Card Issuer-Led Mobile Payments

Figure 4: MNO-Led Mobile Payments

Figure 5: Merchant-Led Mobile Payments

Figure 6: Card Network-Led Mobile Payments

Figure 7: Provisioning and Storing Tokens through SE and HCE

Figure 8: SE vs HCE

Figure 9: Top Three Drivers of Mobile Payment Adoption Among Consumers, 2014

Figure 10: Key Consumer Concerns in Adoption of Mobile Payments, 2014

Figure 11: Apple Pay Tokenization and Transactions

Figure 12: Mobile Payments Transaction Value (US$ Billion), 2015E

Figure 13: Remote and Proximity Payments

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