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ADVANCED PAYMENTS REPORT 2014 – SPONSORED BY

2. Key contenders

When John and Patrick Collison, two brothers in their list of entities most likely to drive mobile payments forward in the
early twenties, founded Stripe – a start-up meant to near term. Payments is one of those “hard to break into” industries
that Thiel alluded to. Competing against incumbents in payments
make it easy for developers to accept payments they is extremely difcult. But start-ups that overcome that barrier and

asked themselves, “how hard could it be?” climb to unprecedented heights are signifed by the category at the
top of the survey chart: Established Alternative Players.
This lack of knowledge or youthful naiveté may have been a blessing, PayPal is the most prominent member of this category, and its
thought Peter Thiel, one of the founders of PayPal and an investor in continued focus on mobile is bearing fruit with consumers. A
Stripe. “If you knew how hard it is to break into these industries, you contributing factor to PayPal’s success on the mobile front is that
wouldn’t even try,” Thiel was quoted as saying in a recent Fortune consumer interaction whether online or over a laptop, tablet or
magazine article. smart phone is relatively similar, and customers don’t need to
No wonder, in our survey, start-ups appear at the bottom of the learn something new when paying with a mobile device from their
PayPal account. But PayPal’s next challenge is to break into physical
payments where payment cards dominate and cash is still used for
“The real holy grail for Paypal is being able to move to the a majority of low value transactions.
physical world and being an accepted mark at a physical The payment infrastructure at shops is architected to accept plastic
retail location,” says Bruce Cundif, Director of Payments cards. Online payment services, such as PayPal or those that use the
Research at Javelin Strategy & Research. ACH networks, lack mainstream connectivity at the Point-of-Sale.
“What they’re doing now is a real attempt to replicate the
Visa and MasterCard model. They want to make that Square is yet another example of a start-up creeping up the ranks in
growth exponential.” the world of payments to reach signifcant momentum in the United
States, which happens to be the largest market for electronic payments
today. Square and other mobile Point-of-Sale solutions
(mPOS) are discussed elsewhere in this report.
Players most likely to drive growth in mobile payments

(% of respondents who agree or strongly agree) New Initiatives
Established alternative players (e.g. PayPal) 85% Respondents are relatively confdent that merchant
Card networks / payment schemes 82% initiatives such as the much talked about Merchant
Web-related companies (e.g. Amazon) 77% Customer Exchange or MCX in the United States have
Banks and fnancial institutions 76%
Emerging alternative players (e.g. Google) the potential to be successful. It makes sense, from
74%
Merchant and merchant initiatives (e.g. MCX) the point of view of merchants, that they develop
72%
Payment providers (e.g. wallet providers) a payment system controlled by the merchants
69%
MNO / bank joint initiatives 64% themselves – a solution that could reduce costs
Mobile network operators and initiatives 62%
Start-ups (e.g. joint ventures like ISIS) 52% and allow merchants to retain control of valuable
0% 20% 40% 60% customer data, ensuring that customer data is not
80%
100%
used to cross-sell one merchant’s customer to a
competing merchant.

6 www.edgardunn.com | www.paymentscardsandmobile.com Edgar, Dunn & Company in association with Payments Cards and Mobile