Why PayPal, Amazon, and Apple Are The Leaders In Mobile Payments

Why PayPal, Amazon, and Apple Are The Leaders In Mobile Payments

Despite new technologies for mobile payments, customers trust familiar companies like Apple.

PayPal, Amazon, and Apple are leading the mobile payment market according to IDC. The research company released the results of a business strategy study that focused on new and emerging payment technologies. The 2012 study is eighth year that IDC has conducted the survey, but it is the first year where mobile payments were a major focus.

While many efforts are underway to develop new payment technologies, many of them based around NFC, most new technologies have yet to catch on with consumers.

Overall mobile payments, however, are catching on with consumers. IDC reports that the number of individuals making mobile payments has doubled since last year’s report and that one-third (33%) of consumers have made some form of mobile payment. The data also shows that the mobile payments market is being led established players and existing technologies.

That’s not too surprising. PayPal, Amazon, and Apple’s iTunes Store are well established as online retailers and/or payment processors. It’s natural that customers would feel most comfortable using those systems. PayPal represented the most mobile payment options for physical merchandise in a brick and mortar store – giving it a commanding lead in the mobile payments field at this point.

There have been many developments around mobile payments since last year’s study including Apple’s iPhone-based checkout in its retail stores, the growth of onscreen bar code payment systems, location-based payments like those offered by TabbedOut, portable payment devices like those from Square and PayPal, NFC based digital wallet technologies, conceptual advances towards using Bluetooth as an NFC alternative, and PayPal’s new in-store retail payment system.

Despite that growth, the majority of consumers using mobile payments have opted for familiar faces and so-called remote payments (buying something through an online retailer or service from a mobile device) account for vast majority of mobile payments.

PayPal led the pack with 56% of users acknowledging that they had made some form of mobile purchase using PayPal’s mobile options. Those options represent a mix of payment types.

  • In-store purchases that can be made at several retail chains with just a mobile phone number and PIN (or a PayPal card)
  • Purchases and pickups from local businesses affiliated with PayPal Local
  • Sending money and making online purchases using PayPal’s mobile app (available for iOS, Android, and BlackBerry devices)
  • Credit card transactions at local and mobile businesses using the company’s free PayPal Here card reader

Amazon and Apple tied in overall ranking. 40% of customers reported making purchases from a mobile device using their online retail systems.

Like PayPal, Amazon offers a handful of purchase options.

  • Digital content (ebooks, music, video)
  • Physical merchandise sold by Amazon online
  • Online purchases made using Amazon Payments

In the case of Apple, that 40% represents purchases and/or rentals from Apple’s iTunes Store made from an iPhone, iPad, or iPod touch.

The clear message in this report is that consumers are more likely to trust established brands and payment systems that are familiar to them. Should Apple or Amazon decide to offer direct mobile payment systems, they will be very likely to succeed – particularly if the technology is simple and familiar to consumers. In the meantime, PayPal will likely continue to expand its lead over other mobile payment competitors.

About the author

Ryan FaasRyan Faas is a technology journalist and consultant living in upstate New York who has written extensively about Apple, business and enterprise IT, and the mobile industry. In addition to writing for Cult of Mac, he is a contributor to Computerworld, InformIT, and Peachpit Press. In a previous existence he was a healthcare IT director as well as a systems and network administrator. Follow Ryan on Twitter and Google +

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