Mobile Payments: Plastic is so Passé

Mobile payments refer to payment services that are made through mobile devices. This may become the next disruptive technology, based on the growth in the number of mobile wallet apps globally and the adoption of mobile payment methods by large businesses like Starbucks Corporation (SBUX) which has been an early adopter of this technology.

Mobile Payments Growth

Technology research firm Gartner, Inc. (IT) estimated that the total value of mobile payments exceeded $170 billion worldwide in 2012 and predicts that they will grow fourfold to more than $700 billion by 2017. Gartner has also estimated that the total users of mobile payments will more than double from an estimated 212 million in 2012 to almost 450 million in 2016. read more about Mobile Payments.

Card Services Industry – Plastic Money Plays

The US card services industry comprises companies that process credit and debit card transactions on behalf of merchants and card issuing companies (such as banks). These companies also facilitate global fund transfers through their payment networks and merchants and financial insitutions pay them a fee for these services.

The industry is dominated by four major companies that process payments and offer value-added services to their clients. These companies’ primary source of revenues is the volume of total payments made through their networks. A small percentage of the total value of payments processed is taken by card companies in the form of transaction fees, charged at a flat rate, and a discount fee, which is charged at a variable rate based on the value of the transaction. read more about Plastic Money.