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Big five mobile wallet providers have broader reach than banks: JavelinBy Rebecca Borison
Apple, Google, Amazon, Facebook and PayPal/eBay are threatening to disrupt the payments ecosystem by replacing traditional banks with mobile wallets, and according to Javelin’s recent report, the five tech giants are dwarfing the reach of the top banks.
The “2013 Gang of Five: Apple, Google, Amazon, Facebook and PayPal-eBay: Threat of the Mobile Wallet Disruptors” report analyzed the current contenders in mobile wallets against major payment networks, financial institutions and mobile network operators. PayPal topped the list as the most trusted brand with the highest ratings for privacy protections.
“Five companies — Apple, Google, Amazon, Facebook and PayPal/eBay are uniquely positioned to capture market share in the mobile social tech cycle,” said Mary Monahan, executive vice president and research director of mobile at Javelin, San Francisco, in the report. “Each company has a platform of consumers that are successfully transitioning from the online to the mobile world.”
Ms. Monahan and Daniel Van Dyke, research associate at Javelin, are the authors of the Javelin report.
When it comes to reach, the “Gang of five” considerably crush the top banks.
Google Android has more than 900 million registered devices worldwide and Apple iOS has 675 million. Facebook has 1.15 billion members, 819 million of which are monthly mobile users.
Amazon has 200 million online accounts, and PayPal has 132 million.
On the other hand, Wells Fargo, Bank of America and Chase each have fewer than 50 million customers.
Among consumers, 43 percent said they would be likely or very likely to use their primary financial institution’s mobile wallet if it were available. Thirty-four percent would prefer to use PayPal, 25 percent would prefer MasterCard MasterPass and 24 percent would prefer Google Wallet.
If the financial institutions do not step up their mobile efforts, the “Gang of five” is ready to pounce.
All of them are working on applications, games, products, books, movies and entertainment to drive attention to their mobile wallets. They may also be hiding the funding source behind the wallet provider, putting financial institutions at risk in terms of merchant-customer relationships.
Mobile wallets also threaten financial institutions by providing more than just payments. The highest-rated mobile wallet feature among consumers was the ability to comparison shop, with 63 percent of smartphone or tablet owners citing their likelihood to use it.
Additionally, half of smartphone and tablet owners said they would use their mobile phones to checkout at a store.
According to a previous Javelin report, one in five consumers is ready to adopt a mobile wallet in the next year. This opens up huge opportunity, but the mobile wallet space is getting more crowded, creating the need for these wallet providers to stand out.
In its report, Javelin found that the brands with strong innovation scores tended to have low privacy and trust scores and vice versa.
The one exception is PayPal, which is the most trusted brand and the highest gains in consumer perceptions over the past year moving up 11 percentage points in trust.
Other payment networks, financial institutions and mobile network operators remained at the same trust level or lost points, but each of the five mobile wallet providers saw gains.
The report also found that Apple is still seen as the most innovative brand at 38 percent, Google follows at 32 percent and Amazon at 27 percent. Microsoft ranked at 25 percent and PayPal ranked at 24 percent.
All five demonstrated gains in innovation perceptions between 5 and 10 percentage points over the past year. Payment networks, financial institutions and mobile network operators all remained flat or lost points.
In terms of privacy protection, PayPal led at 34 percent, with a gain of 8 percentage points from last year. All of the “Gang of Five” brands saw gains in this category, while none of the other brands did.
According to Javelin, PayPal was the clear overall winner. With its high ratings in both innovation and trust it is solidifying its position as the “alternative” payment network.
Having already partnered with Discover Financial Services and secured deals with merchant acquirers such as Heartland, Vantiv and WorldPay, PayPal expects to reach two million physical world merchants by the end of the year.
Whether or not PayPal is the ultimate winner, mobile wallets definitely seem to be challenging the dominance of traditional financial institutions.
“Consumers’ top mobile wallet preference is the primary financial institution’s position to lose,” Ms. Monahan said in the report. “However, mobile wallets threaten to disrupt the relationship between customers and their primary financial institutions at the point-of-sale.”
Rebecca Borison is editorial assistant on Mobile Commerce Daily, New York
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