When it comes to mobile payments, PayPal upset the cart for banks and other retail financial service providers such as Western Union. But PayPal’s strong mobile payment market share is increasingly threatened by the likes of Apple, Google, Samsung and major retail chains, as new research from Parks Associates illustrates. The latter are making use of ¨white label¨ mobile payment apps that mobile app developers have opened up to them for branding.
Mobile Payment Market Share
Overall, 18% of smartphone users have used a mobile payment app, according to Parks’ ¨Reassessing Mobile Payments: A Duopoly or Oligopoly?¨ Among them, 12% of U.S. smartphone owners use the PayPal app, 9% use a retail-branded app and 4% use Apple Pay. Android Pay is being used by 3% and Samsung Pay by 2%.
Turning to retailers, Starbucks’ mobile payments app is the most popular in the U.S., accounting for 7% of smartphone users. Dunkin’ Donuts follows with 3%.
Apple and Google are leveraging their respective Web browsers, as well as their iOS and Android app marketplaces and ecosystems, in bids to grow and acquire a dominant share of the market, Parks points out. Similar moves undertaken in the past, notably by Microsoft, attracted the scrutiny of the FCC, federal lawmakers and the Dept. of Justice.
“While PayPal is the clear market share leader, more merchants are requesting information from Apple Pay than any other mobile payment solution,” Parks’ Research Analyst Chris Tweedt was quoted in a press release.
“Apple has added a ‘Pay with Apple Pay’ button into its Safari browser, and the company has signed up 21 of the top 100 online merchants, with others to come. Likewise, Google has launched an Android Pay function into its mobile Chrome browser.
PayPal is attempting to counter these efforts by leveraging its large customer base and the popularity of Venmo, its platform-agnostic peer-to-peer (P2P) social networking money transfer app. This includes efforts to increase Venmo usage when buying items in stores, which would generate additional revenues, Parks notes.
Retailers need to be in the mobile payments game, according to Parks. “Merchants must be ready to accept mobile payments because those that wait will be at a competitive disadvantage,” Tweedt said.
“Marketing efforts from PayPal and Apple to promote their solutions will increase consumer awareness, adoption, and spending. Users don’t spend much money with mobile apps today, but we expect to see a large increase – as much as 150% – in mobile payment users and transaction values over the next five years.”