The Mobile Payment War: Apple Pay, PayPal and More

As it becomes clear that mobile payments will dominate peer-to-peer money transfers and point-of-sale transactions in the future, the battle for mobile payment market share is heating up.
Competition is stiff in this emerging market, and for good reason. The chart below illustrates the growth that is expected from mobile payments over the next few years, which is nothing short of impressive.
4.10.15 Mobile Payment Growth
There are several key players in the battle for our mobile payment transactions. Let’s take a look at each one.
Apple Pay
Apple (NASDAQ: AAPL) is perhaps the latest to the party. But with Apple Pay built into Apple’s hardware and roughly two-thirds of iPhone 6 users already having set up the application, it’s clear that Apple is going to be a force to be reckoned with in the mobile payments space.
PayPal is widely accepted across the Internet and is branching far beyond its roots as eBay’s (NASDAQ: EBAY) payments platform. In fact, eBay is splitting its company in two later this year by separating its much faster growing PayPal division into its own company.
PayPal has already spread far beyond the U.S. – I have even used PayPal to pay for a bicycle tour in Spain.
It is worth noting that PayPal’s Venmo is a rapidly emerging peer-to-peer payment system, particularly popular among millennials. I actually use it to pay rent and to pay my roommate for utilities and various other shared expenses.
CurrentC, the mobile payments product of the Merchant Customer Exchange, is the mobile payments response from a coalition of U.S. retailers, including CVS (NYSE: CVS), Rite-Aid (NYSE: RAD), Best Buy (NYSE: BBY), Wal-Mart (NYSE: WMT) and Target (NYSE: TGT).
Unlike most of the other payment solutions listed above, CurrentC relies on QR (quick response) codes rather than near-field communication (NFC) technology to facilitate transactions.
Alipay is the mobile payment arm of the Alibaba Group (NYSE: BABA), the wildly successful e-commerce giant that is taking Asia by storm. Its 2014 initial public offering was the largest IPO ever, and the stock rose 35% after it began trading. Alipay has the biggest share of the Chinese market for mobile payments and has been adopted by companies like Macy’s (NYSE: M).
Google Wallet
Google’s (NASDAQ: GOOGL) mobile payment service has been around since 2011. The most recent numbers suggest that Google Wallet is still ahead of Apple Pay in market share, but that Apple Pay is quickly closing the gap due to higher user engagement and Apple’s push to popularize it within its customer base.
The Bottom Line
The current landscape of the mobile payments market has Alipay in the lead in Asia, with PayPal in the lead just about everywhere else. Though Apple Pay seems to be pretty seamless and secure, adoption is limited to users carrying a compatible Apple device.
Google Wallet is only compatible with Android devices, though there are literally hundreds of millions more Android devices than iPhones.
CurrentC’s strength is that it is backed by specific retailers than can refuse to adopt other platforms like Apple Pay. I consider this a weak competitive advantage, however, as it means some CurrentC users are using it because they have no other mobile payments choice, and not because they prefer it over other options.
Any way you look at it, the battle for mobile payments will be fierce. But a rising tide lifts all boats. Though I suspect Apple Pay, PayPal and Alipay to remain the dominant forces in the market, it is possible for all of these players to grow considerably over the next few years.
DISCLOSURE: I personally own shares of Apple.

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