How does the Growth Look like in 5 Major Payment Systems

December 2, 2014     By : Ray

Mobile payments by U.S. citizens would reach $90 billion by 2017, as per a research by Forrester. Startups, banks, credit card companies and tech giants are battling it out to make a mark in mobile payments. As per AngelList, there are 1,475 digital payments related startups. There are some major payment systems that have been making impact in this space. Here are 5 such companies:

Dunkin Donuts

The Dunkin’ Donuts mobile payments app has been downloaded over 10 million times since it was launched in August 2012. Dunkin’ Donuts has followed a similar approach to that of Starbucks. When customers use the Dunkin’ Donuts’ app they accrue “DD Perks” rewards points which can be redeemed for free drinks. The app relies on a QR code/barcode-based system that allows users to pay with their phone at the store, by having the cashier scan the codes with a code-reader attached to the register.

The popularity of Dunkin Donut app is evident from the following chart:

dunkin donuts1

Source: Business Insider

Venmo

Venmo’s transaction volume reached $468 million in the second quarter this year. This shows a 347% YoY (year-on-year) increase with an annual run rate of around $1.9 billion. Venmo has gained some prominent popularity over the past year. By simply loading the app onto your smartphone, user can to bank and credit-card accounts and link up with friends to send money on the go. It makes scenarios like splitting restaurant checks and paying rent quite seamless.  Venmo charges a user just 3% for a credit card transaction.

The popularity and growth of Venmo is evident in the following chart:

venmo

Starbucks

Last year, Starbuck had announced that now 11% of sales volume comes through its own mobile wallet. On a nice spring day early in 2009, Starbucks launched its mobile card app in 16 stores. It was so successful it rapidly expanded the program nationwide by allowing consumers to pay by letting patrons display a bar code to be scanned at the point of sale. Starbucks’ payment volume reached $413 million during second quarter with a 73% YoY increase. Startbucks has 12 million monthly active app users.

The growth of Starbucks is evident from the following chart:

starbucks

Google Wallet

Google Wallet has only about 20 million users. Google Wallet has invested around $400-$500 Mn and that 4000 sales people are working with merchants according to Tom Noyes.

However, post Apple Pay effect, As reported by Ars Technica, weekly transactions in Google Wallet have increased by 50% and in recent couple of months, new users have almost doubled as compared to previous months. The main reason behind Google Wallet gaining further traction post Apple Pay launch is that Apple Pay is keeping the NFC POS terminals alive. NFC is a key delivery component of the mobile wallet services by both Google Wallet and Apple Pay. Since Apple Pay is an iOS only mobile wallet service, Android users can look to Google Wallet as the alternative. Moreover, Google Wallet is available for iOS as well.

Softcard (earlier ISIS)

Softcard and McDonalds recently collaborated to enable Softcard’s payment service across McDonalds’ 14,000 U.S. locations. Earlier this month, Softcard also collaborated with SUBWAY to bring NFC-based mobile payments to 26,000 SUBWAY U.S. locations across U.S. The app is compatible with over 80 mobile devices across the three carriers. Softcard’s NFC based mobile payment service is available across 200,000 locations in U.S.

Softcard recently invested $1.5 million for a national marketing campaign, as part of which ads will run primarily on mobile platforms and social media. Now with Apple bringing NFC and helping in expansion of NFC through Apple Pay, Softcard is looking to target roughly 60% of U.S. smartphone consumers not using iPhones. Softcard recently announced its support for Windows phone.

 

Ray

Ray has keen interest in the area of devices, OS and wireless technologies. He is a Mobile Technology enthusiast and believes that Mobility is going to completely change the way we do Payments and Commerce. He wishes to share this belief with the world by providing such content through LetsTalkPayments. Ray has done his engineering as well as MBA.