Whenever Apple moves to purchase a company, you know they’ve got something up their sleeves, and it’s not hard to imagine the possibilities of their latest acquisition: maker of fingerprint sensor chips, AuthenTec.
While Apple’s taking a wait and see approach to the nascent mobile payments and digital wallet industries, PayPal seems ready to launch an all-out offensive. In addition to its existing assortment of mobile, local, and online payment systems, PayPal announced this week that it is acquiring startup card.io.
card.io currently works with a range of iOS and Android developers to help them integrate mobile credit/debit card payment capabilities into their apps without the need of additional hardware like Square’s card reader or PayPal’s Here card reader. Instead, card.io’s partners use the built-in camera of an iPhone (or other iOS or Android device) to snap a photo of a credit card. The card number and related information is extracted and passed to a payment processor to complete the transaction (manual keying in a card number is also supported as a backup).
Mobile payment technologies have an interesting and complicated relationship with local businesses. On the one hand, local mom-and-pop restaurants, shops, and services are probably the companies that you’d expect to adopt new payment technologies the slowest – particularly if those technologies require new point of sale hardware like an NFC reader. On the other hand, mobile payment systems could be poised to deliver a new wave of business to such local companies.
Making the situation more complicated is the fact that any mobile payment system (Google Wallet, PayPal in-store purchasing, or any system that Apple may be slowly developing) can’t be considered a solid winner or option unless that system strikes it big with local businesses. A system that only applies to large chains, like the in-store purchasing the PayPal rolled out to Home Depot and other retailers, can’t be considered mainstream unless it’s adopted very widely and by a significant percentage of small businesses.
Further complicating the relationship is the fact that many players in the race to create a true digital wallet are on focusing widely varying options for small and local businesses. That means that no one company is leading and no company really seems to have a consistent strategy for tapping this immense and important market.
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.
We’ve all been waiting with bated breath for Apple to take the mobile payment industry by storm and bring it to the mass consumer market. For years, there have been whispers that Apple is working on its own approach to reinventing mobile payments, including the possibility of a NFC-equipped iPhone. When Apple unveiled Passbook in iOS 6 last month, the company announced its first real foray into mobile payments by partnering with select companies for handling virtual goods like coupons and airline tickets.
According to a new report on The Wall Street Journal, Apple’s Passbook is only a shadow of things to come. The company is “deliberately” working on its own mobile payment system, and while the rest of its competitors scramble to test the waters, Apple is sitting back and developing the right strategy.