Who Wants To Be A Mobile Blue Whale (Or Be Swallowed By One)?

“Paper, Plastic… or Mobile?” – a very catchy and intriguing name for a workshop on mobile payments conducted by FTC on April 26, 2012. It makes us realize that we have been accustomed for quite some time to the traditional methods of paper or plastic payments – cash, check or cards. It’s almost time for “disruptive innovation” in the payments space… and it is here (no pun intended with PayPal Here) – MOBILE PAYMENTS.

Wikipedia defines disruptive innovation as “an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology.” There have been some disruptive innovations or ‘tsunamis in the ocean’ of payments industry, although quite rare and slow. Remember reading in the history books about the old barter system? Concerns over uneven exchanges and evolution in valuation of goods and services eventually triggered the use of metals, jewelry, and coins, as well as development of paper bills as IOUs for what we presently refer to as money. Soon enough, greed kicked in for humans to acquire bigger and better things than their friends and neighbors that they couldn’t afford – and there came the next disruption with credit cards and debts…

Now with the technology evolution and about half of the U.S. mobile consumers owning smartphones (source: Nielsen), as well as considering the inconvenience of high credit card fees being indirectly passed on consumers, Mobile Payments technology is ready to create a major disruption by challenging the traditional cash, checks and plastics methods of payments. Per a Mobile Payments Study by the Yankee Group, mobile transactions are expected to reach more than $1 Trillion (Trillion with a capital T) globally in 2015!

Looking at that figure, a lot of startup fishes as well as existing whales have taken the deep dive to scoop a piece of that capital T. It is a race… an extremely fierce race to be one of the big blue whales in the ocean full of fishes and with new ones birthing every moment. And this time, these companies cannot afford the traditional slow disruptions – they have to create tsunamis, some major tsunamis to achieve consumer adoption and capture majority of the seas. It is as if all these companies are sitting on the hot seats, trying to answer all the questions as fast as possible by navigating through regulations and security concerns, while keeping consumers in mind – but in this case, there are no lifelines!

Who are some of these fishes and whales sitting on the hot seats? In my next post, I will discuss some of the major players in the industry – both the startups and established companies looking to move into new markets.