There is a battle about to rage in Europe among mobile payment providers. As global mobile competition exacerbates, industry leaders intent on aggressive pricing may render SME-serving providers and small-scale purveyors with a decidedly Dickensian future. Across the globe, China is amassing mobile providers, but a mobile market in Iraq could be premature.
Slow New iPhone Models And The Old Curiosity Shop
Wearables are becoming the must-have of mobile devices. Product launch timing by Apple and other smartwatch leaders that sees longer intervals between model releases might be a catalyst to wearable ignition. In Australia, as new smartphone models are taking longer to come to market, consumer curiosity is exploring wearables, according to Telsyte.
Could Apple and Samsung have purposely delayed new smartphone rollouts in order to ignite wearables? Whether the answer is yes or no, smartwatches are igniting in Australia.
Industry analysts find that smartwatch sales in Australia account for one-third of all wearables sold. Analysts attribute this state of affairs to increased use of contactless payments by consumers, the popularity of health and fitness apps and lower prices.
Sales of smartwatches grew by 89 percent in the first six months of 2016 compared to the same period in 2015, which is a marked improvement after a slow initial sales period. Over 1 million watches were sold in the first half of 2016.
Foad Fadaghi, managing director of Telsyte, opines that consumers are exploring new gadgets now that the time it takes for new smartphones to come to market is longer.
“As smartphone replacement cycles have lengthened, consumers are turning to other gadgets, and smartwatches have started to capture the imagination. We might be seeing the beginning of a substitution effect where consumers are choosing a smartwatch over a new smartphone.”
Apple Watch is blazing the trail with over 50 percent of market share, closely followed by the Samsung Gear and Fitbit Blaze. The new exercise-oriented watches appeal to consumer lifestyles and are beating out competitors, such as Fitbit and Garmin. According to Telsyte, 47 percent of smart wearable users exercise for 30 minutes per day compared to 30 percent for the general public.
New designs are also appealing to consumers, and a new mCareWatch can help older people, those with dementia and their caretakers by tracking the health and safety of the elderly.
Telsyte predicts that almost 40 percent of Australians will be wearing a smart wearable by 2020. Currently, according to estimates, 14 percent have a smart wearable.
Great Expectations For iPhone 7
Telsyte is expecting Apple’s recent travails to reverse with the launch of the new iPhone 7 in Australia and the subsequent price decreases on the iPhone 6s. Telsyte interestingly predicts that sub-premium Android models may be affected by a trend in purchases of secondhand older model iPhones. A senior analyst with Telsyte, Alvin Lee, sees a pattern whereby Apple consumers are ready to upgrade their iPhones.
“Android had a good run in the first half of 2016; however, trend and purchase intention data indicate Apple consumers are on the verge of an iPhone upgrade cycle,” Lee said.
And if consumers are buying Apple smartwatches and new phones, that might just do it for Apple.
Trupay’s UPI
Trupay is one of the first private sector companies in India to offer a mobile payment app based on a unified payment interface (UPI), according to a press release. Users need only a phone number to send and receive money to their bank accounts and to send payments to another bank account, eliminating the need for third parties. Merchants will receive payments in real time, which will significantly reduce transaction costs.
Bleak House In Europe For SME-Serving Firms
The gloves are off in the fight for Europe’s mobile payments market. According to Reuters, iZettle and SumUp are enabling European SMEs to adopt mobile payments in lieu of cash. But with the impending arrival of U.S. competitors, such as Square, they are now pursuing aggressive strategies.
Daniel Kline, chief executive of SumUp, told Reuters that his company is prepared to lower their fees for clients in order to prevent losing market share to Square and other U.S. players. Lower costs will certainly encourage merchants to switch to mobile payments while the providers are fighting it out and transition costs remain at bay.
Fortunately, for SumUp, it has some reserves to lean on after making a profit for the first time in August. The company operates in 14 countries in Europe and charges less than other global mobile payment providers, according to Juniper Research. The global average for charges by mobile providers is 2.4 percent; SumUp charges between 1.45 and 1.95 percent. According to SumUp, they are processing transactions valued at €1 billion ($1.2 billion dollars), and Klein sees huge demand.
IZettle, a Swedish company, is Europe’s market leader, with an annual run rate of €3 billion, and it also announced in June that it was reducing fees for merchants with high sales volumes.
Europe is seeing heightened competition because EU regulation is about to relax requirements for nonbanking players in the payments space. In 2013, PayPal introduced PayPal Here in the U.K., and Square is conducting field tests in London before its launch Europe-wide.
Analysts are predicting that cost-cutting is risky even though there is potential for volume. Payments firms who serve SMEs may find it difficult to scale without profitable bottom lines.
And it’s no wonder the U.S. companies are eager to come to Europe, and it’s not to enjoy the sulfite-free wine and unrivaled French cheese. Juniper Research has forecast global mobile point-of-sale revenues of $50 billion by 2021 compared to just over $6.5 billion in 2016. Mobile POSs are expected to account for one in three terminals. While the U.S. mobile market for medium-sized enterprises is saturating, firms are eager to go international. Canada’s Shopify already has a presence in the U.K. and just introduced a card reader.
The EU, for its part, is leveling the playing field for banks and payments firms; by 2018, third parties will have access to bank accounts, giving customers more choice in payments.
Mobile adoption patterns and the use of cash are different in Europe, which might give the home teams an advantage. But let’s hope for few casualties as the battle for a piece of Europe’s one-fifth share of global revenues commences.
China Amassing Mobile
In China, Xiaomi Mi Pay has launched a mobile wallet. Currently, Xiaomi Mi Pay supports debit cards from 12 banks and credit cards from 20 banks. Users can add up to eight cards to their mobile wallet, which maximizes loyalty programs. Xiaomi joins Apple Pay, Samsung Pay, WeChat Pay and Alipay from Alibaba in the robust Chinese smartphone market, which is the largest worldwide.
Hong Kong Nothing Like China
Also in Asia, the telecommunications firm HKT has expanded its Tap & Go service to online and offline payments to retailers with additional new features for P2P payments. Mobile payments in Hong Kong have been weaker compared to other countries, particularly China, where 50 percent of consumers pay using mobile devices.
HKT is offering the PaymentPartner service for in-store payments using apps or QR codes, and five accounts can be registered per family with PayMaster, Tap & Go and PayBuddy, a P2P payments platform.
Hard Times For Ideal Payments In Iraq
Ideal Payments has partnered with Taif Money Transfer to launch a mobile payments app in Iraq, powered by Monniz, according to Finextra.
Taif eWallet is Iraq’s first mobile payments app in a country whose 35 million inhabitants use cash for the most part and are often unbanked. Less than 10 percent of the population have bank accounts, and less than 3 percent have a credit card.
That and a population that has been burned by corruption and where the rule of law is largely absent may make efforts by Ideal Payments to establish mobile payments technology an uphill battle. However, Taif Money Transfer, which will operate the service, is expected to instill some trust in potential users
Ideal Payments’ CEO said: “We are delighted to be one step closer to our vision of digitalizing payments in Iraq and serve the country’s unbanked population by reducing the cost, time, effort and risks associated with making cash payments. Our goal is to replicate the success of and the value created by mobile payment operators in developing countries, such as M-Pesa.”
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