Mobile payments: everyone talks about it, but no one knows exactly how it works or who will win.
In a recent report, BI Intelligence explains why card readers like Square — and not near-field communications, carrier billing, or apps — combined with software and services are in the best position to win.
We also detail why Square specifically has the edge over larger latecomers in the card reader space.
Here’s why card readers — and specifically Square — are positioned to be the future of mobile payments:
- Convenience: Card readers are at least as convenient as the incumbent solutions, and sometimes more so. Paying with your name, as with “Pay with Square”, when it works, is even more convenient than cash or credit.
- Distribution: Square has cracked the nut: first, by piggybacking on the existing credit card network, and now by moving up the value chain and providing added services to merchants, ensuring that sellers will use the platform more and more.
- Rapid Growth: Square is growing at an incredible pace. Square recently reported it’s now on track to process more than $6 billion worth of transactions per year. That number could instantly double thanks to its new deal with Starbucks. The company is less than three years old, and its customers are limited to small businesses and sole proprietors based in the United States. For comparison, Verifone is a global 30-year-old company which serves huge retailers as well as smaller businesses, and is on track to process about $10 billion in mobile payments this year.
- Opportunity: Over time, Square will slowly provide its own payments network. This will boost its profitability (as it will allow it to stop paying expensive credit card fees), and ensure that it controls the transaction. This, in turn, will allow it to turn payments into a software experience and provide value-added services to consumers as well as merchants on top of payments.
In full, the special report:
- Outlines the two overriding strategic issues in the market.
- analyses the four kind of solutions that currently matter — card readers, apps, carrier billing, and near-field communications — and their prospects for success.
- Show why it’s too early to size the market (but why it will be big).
- Map out the winners and losers.
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