A Battle Emerging in Mobile Payments

A Battle Emerging in Mobile Payments
By 2018, roughly 5 billion people had broadband subscriptions.

Mobile payment systems developed by Apple, Samsung, and Google used NFC chips, merchant banks and Visa or MasterCard to complete transactions wirelessly.

In Asia and Latin America mobile payment systems such as Alipay used QR codes. Still other competitors such as PayPal used a downloadable application and the Web to transmit a customer’s information.

In India and Africa, systems like Inter-Bank Mobile Payment Service and M-Pesa were enabling “unbanked” and “underbanked” people access to fast and inexpensive funds transfer.

A mobile payment system that cuts out the credit card companies could potentially save (or capture) billions of dollars in transaction fees. Credit card companies and merchants thus both had high incentives to influence the outcome of this battle.

Discussion Questions:

What are some of the advantages and disadvantages of mobile payment systems in a) developed countries and b) developing countries?

What are the key factors that differentiate the different mobile payment systems? Which factors do consumers care most about? Which factors do merchants care most about?

Are there forces that are likely to encourage one of the mobile payment systems to emerge as dominant? If so, what do you think will determine which becomes dominant?

Is there anything the mobile payment systems could do to increase the likelihood of them becoming dominant?

How do these different mobile systems increase or decrease the power of a) banks, b) credit cards?

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