Let’s Embrace Innovative Tech Start-Ups

Here on this blog, after reading the recent blog post about the PoS revolution, I wrote a follow up post about the barriers to wider adoption of mobile payments. This time, I want to look at the young companies driving mobile payments and their impact on the wider financial ecosystem.

Mobile payment start-ups are in many ways disrupting the traditional banking sector by offering simple PoS solutions like mobile wallets and card readers, which you simply plug into a smartphone or tablet. These third-party technology developers are growing and forming partnerships with small merchants - in pop-up stores and outlets, outdoor events, taxis, cafes, and even flea markets - to get a competitive edge over telco operators and banks, which are slow to seize this opportunity. Read this new article in The Economist about start-ups in Sweden.

The Future is Mobile

PwC's Mike Heindl recently said that, “Mobile payments will create the most significant revenue opportunities of the decade for financial institutions. It's estimated that [by 2015] they will reach $20 billion in annual revenue opportunities for financial institutions.” Rob Drozdowski of Federal Deposit Insurance Corp adds that, “As mobile payments continue to grow, financial institutions need to evolve their management of third-party service providers.”

I agree. I believe financial institutions should leverage the huge customer reach of telco operators and come up with attractive bundled packages and embrace entrepreneurially oriented start-ups offering mobile payment systems.

Crowded Marketplace

Among the bigger names in this new sector are US-based Square (co-founded by Twitter’s Jack Dorsey), which recently announced it will extend its services to Japan. Then, there’s Payleven and also Sum Up, to name but a few.

An ambitious newcomer to the scene is Stockholm-based iZettle, which identified and plugged a gap in the market that banks and operators have left wide open. "Just a few years ago, around 20 million European small businesses lacked the means to accept card payments,” Johan Bendz, CMO at iZettle told me recently. “At the same time, European consumers were increasingly choosing to pay with cards rather than cash. This was becoming a major challenge for a lot of small businesses. By leveraging recent developments in technology, we managed to develop an easy, secure, and affordable way of accepting payments,” he adds. Although the company has not yet announced a foray into the mobile payment arena, I think it is inevitable that they will come up with something exciting soon enough.

Disrupting Finance

“Now, the traditional payment ecosystem is changing for good and it's young companies like iZettle driving it instead of the financial sector. This is hardly surprising, though. Over the past few decades, "disruptive" services have more often come from start ups than established industries," adds Bendz.

The ability to complete payments wherever a PoS needs to be installed quickly and affordably is an attractive service for consumers that’s likely to leave a lasting impression on the financial industry.

What about the impact of start-ups like these on m-commerce in developing countries? Will technology enable emerging markets to yet again leapfrog from a cash-based economy to mobile financial services, and skip regular PoS-machines in stores? I will for sure follow developments in this area with interest.

Have you used one of these mobile payments services? Let us know what you think about them. Share your thoughts below, or on Twitter.

Posted by Lisa Elénius Taylor on 4 Jun, 2013
Lisa Elénius Taylor's picture

Written by: Lisa Elénius Taylor

Marketing Manager, M-commerce, Ericsson. Lisa joined Ericsson in 2013 and has been working in the telecom industry for over a decade. She has participated in launching mobile wallet services and mobile payment collaborations in three different markets in the Nordics. She is passionate about telecom and hopes that one day everything she now carries around in her purse will be on her mobile, except possibly for her make-up.
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