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Who Will Make The M-Pay Final Four?

March Madness is maybe the most aptly named sporting competition in history. For about a month each year, the nation seems to literally go crazy over college basketball. The estimated advertising revenue for the NCAA tournament is $1.15 billion – the equivalent of ~4.75 Super Bowls. While that is an impressive haul, it unfortunately does not quite balance out the $1.9 billion businesses estimate they will lose this month in worker productivity while staff are watching basketball games instead of, well, working. Average viewership in 2013 (the last year records are available for) indicates that games are worth 10 million viewers, and about 1.4 million hours of purchased online streaming.

Not bad, especially considering regular season b-ball games generally don’t even clear the 2 million viewer mark.

Why the annual obsession? Different reasons. Some people want to cheer for their favorite team, some people love college basketball, some people love the gambling opportunity (an estimated $9 billion will be bet this year), and some (or as we at PYMNTS have heard repeatedly professed) people just want to root for Duke to lose, preferably embarrassingly.

However, at least some of the appeal has to be the b-word: the bracket — a simple tool by which for about a month each year we can order our lives. Instead of a complex debate about strategy or style, the bracket keeps track of who’s up, who’s down and even breaks down the winning cohorts into easy to remember alliterative groups – the sweet sixteen, the elite eight, the final four.

When doing our own (we’ll leave it to you to guess why we are so enthralled) – payments needs a bracket. And as the people who brought you Woodstock for Payments’ Geeks, it seems only fitting we should make it.

So as to keep pace with the NCAA, we present the Mobile Payments Elite Eight. We’ve got the match-ups and the pre-game reports. And, how do we decide the winner? Actually we don’t – you do, but more on that later.

 

The Android Division


Samsung vs. Google

 

The Android division has long been playing for the title of mobile payments champion, but has been beset with difficulties almost from inception. So, after several years of playing “Who Will Run Android Pay,” it is still a very valid question.

Android is the most prevalent mobile OS on Earth – but its users are neither as affluent or eCommerce enthused as their iOS using counterparts. Perhaps more important – they are a fractured user base. Android is an open OS, meaning it is easily customized and modified. Even though there are oodles of Android devices all over the world, only about 20 percent of those at any given time are running the most current version of the operating system. This is in contrast to the 80+ percent of iOS users who do.

Past difficulties aside, however, the slate of powerful new challengers seem to have galvanized the struggling division in recent months, with big plays from both Samsung and Google to push their own mobile payment ambitions as they strive to take the title in the Android Division.

Google – Pre-Game Report

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Google Wallet Users: It is unknown exactly how many users Google Wallet has since Google has not offered a recent report. However, estimates in late fall of 2014 put the number of downloads at around 20 million (after four years in the market – it launched in 2011.)

Gmail accounts: According to Google’s last official update in 2012, there are 425 million active Gmail accounts. Google was hoping to use those accounts to inspire P2P payments via the Google Wallet when it launched in 2013.

Google’s Market Capitalization: ~$381 billion

Big Drafts/Power Players


Google has both a big draft and a big play to call its own as the race for the M-Pay ring gets hot.

In February Google acquired Softcard, the mobile payments system backed by Verizon, AT&T and T-Mobile. That deal ended a five-year conflict between the mobile carriers and Google that kept Google from accessing the NFC softcard-splash-screen_1024element on any non-Sprint Android phone (which was practically all of them). Google also had limited success getting banks on board for Google Wallet, while Softcard was widely viewed as the preferred effort by card-issuing banks. With the pick-up, Google can now distribute its mobile wallet as one of the jillion pre-loaded apps that come on all Android phones – a particularly important pick-up for Google which does not make its own handset, nor directly control the Android operating system.

Plus – given the price tags of other deals in the space – it seems Google got a bargain buy with Softcard. Though no details are officially released, sources estimate that Google picked up Softcard for about $50 million or about the amount of money it makes in 15 minutes from its search-generated ads.

In the big plays department, Google seems to have pivoted in its strategy to leverage that giant Gmail user base into strong support for its burgeoning payments platform. A new tool, tentatively labeled, “Pony Express” will allow Gmail users to access and pay their bills directly through the platform, instead of having to go to the company website to pay.

To use the service, users must first provide basic information, including their Social Security number, to a third-party service that confirms their identity. “Pony Express” would not only allow users to receive and pay for their bills, reports said, but would allow users to organize all of these bills on a platform. Reports also note that “Pony Express” would work by connecting users’ bank accounts to the service, suggesting that this tool may signal a whole new payment system separate from Google Wallet, which doesn’t connect directly to users’ bank accounts.

And of course, a whole new data source – who pays what bills and how much they spend.

Weak Spots


Google has been trying to ignite a payments platform for years without much success to show for it. Merchants and potential users aren’t wild about sharing data with Google as it is widely acknowledged the search giant is mostly into payments for the access to information.

Most recent successes reported with Google’s wallet adoption are focused on its competitor Apple Pay and Google’s ability to draft on that success due to their shared use of NFC. And that drafting is happening on a thin margin of success – since so far neither users or merchants are showing overwhelming enthusiasm for NFC.

And Google doesn’t have a device to call its own, but it is tied exclusively to the Android platform. Given the highly fractured nature of that platform – it’s unclear if Google can marshal enough concerned interest to ever get to ignition.

Samsung: Pre-Game Report

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Due to the sheer volume of phones Samsung makes, it’s hard to track exactly how many Samsung smartphones there are out there. As of 2014, Samsung had sold over 200 million Galaxy S phones (the line intended to compete with iPhone).

As the No. 1 handset maker using Android, Samsung controls 43 percent of that incredibly fractured market. In scale, the No. 2 player – Sony – controls only 4 percent.

Samsung’s Market Cap: ~$200 billion

Big Drafts / Power Players


Samsung’s biggest mobile payments move in 2015 was its acquisition of mobile wallet tech firm LoopPay.

Loop uses Magnetic Secure Transmission (MST), a patented technology that turns existing mag stripe readers into mobile contactless receivers and enables LoopPay digital wallet users to use their LoopPay wallets at more than 90 percent of merchant establishments today.

"This acquisition accelerates our vision to drive and lead innovation in the world of mobile commerce. Our goal has always been to build the smartest, most secure, user-friendly mobile wallet looppay-1-520x520experience, and we are delighted to welcome LoopPay to take us closer to this goal,” JK Shin, president and head of IT and mobile division at Samsung, said in a company news release.

LoopPay’s wallet also enables any card with a mag stripe on it, including gift and private label cards as well as loyalty and membership cards. LoopPay’s technology mimics the swipe of a physical mag stripe card, so merchants also pay card present rates for LoopPay transactions.

Prior to the acquisition, Samsung was an investor in LoopPay, along with Visa and Synchrony Financial.

Although LoopPay uses mag stripe terminals and technology to enable mobile payments today, LoopPay co-founder Will Graylin said back in December of 2014 that the “mystery handset” manufacturer (which we now know to be Samsung) would also incorporate NFC technology, in addition to LoopPay’s magnetic stripe-mimicking technology that allowed users to make payment without opening a mobile app.

Weak Spots


Samsung has been trying to develop its own OS called Tizen in order to get away from Android. While some analysts hold out hope that Tizen will be critical to Samsung’s IoT efforts, as Karen Webster noted, “it’s gotten just about nowhere on smartphones."

And, lately, Samsung has had some difficulty with those smartphones. The Galaxy S5, despite positive critical and user reviews, didn’t sell well, and Samsung’s stock price has taken a beating in the last six months on the basis of that underperformance.

The fortunes of the payments enabled Galaxy S6 are looking better, but the issue reveals Samsung’s biggest hole — that the fate of their payment system is entirely tied to the fate of their handset. Though Samsung has in the past showed willingness to license out its tech and could very well do so with Samsung Pay, as of right now the platform requires their branded device to work. But keep in mind that Samsung Pay started life (as LoopPay) with a fob and peripherals that enabled the use of its technology with any handset. For that reason, Samsung Pay could be the Android Division’s bracket buster.

Titan Division


Apple vs. The Card Networks

We know what you’re thinking. No, it’s not a typo – we meant to write Apple vs. The Card Networks. The Titan division is actually the one that could, in fact, bust the brackets and the payments ecosystem wide open.

But aren’t they on the same team? Aren’t they working together?

And the answer is yes. But like a lot of things in payments, they’re also competing. Fiercely.

In the Titan division, the mobile payment game is all about scale and ignition. Both teams here need everyone to embrace their method of payment. Right now Apple’s roadmap leverages the ubiquity of the card products that the networks’ issuer-customers distribute – people have credit and debit cards, 800M+ of them are registered to iTunes accounts. And, the networks are riding Apple’s brand cache and prominence to transition from plastic card-based payments (that they dominate and are quite a visible part of) to digital rails (that push card and issuer brands down the stack).

Apple has embraced the existing payments ecosystem, and leveraged the relationships, standards and technologies that has all of the ecosystem supporting its ambition to become the way that consumers with iPhones pay at the physical and virtual point of sale. But let’s say that Apple decides in a few years that it has amassed enough accounts that it has enough sway with consumers to move them to other rails – the Apple Pay rails. Or uses the power of the digital purses that it has amassed – assuming it does – to dictate terms and conditions for continuing to ride those rails. There’s history on the mobile operator side (AT&T contracts) and the ecosystem side (music and iTunes) that it isn’t out of the question. And, lest we forget that Apple managed to persuade issuers to pay it 15 basis points on each transaction at the jump.

At the same time, since scale is the name of the game here, the card networks have to place a lot of bets – since at the end of the day, they just want their card products used. Used in plastic form, in digital form, in any form that consumers want to use them. So, they have launched their own digital wallets, and are enabling other schemes. It’s still way too early to call a winner. And in the case of Apple Pay, the iOS ecosystem, while the ecosystem of the affluent, isn’t the only operating system in town.

Apple: Pre-Game Report

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While there are no incredibly current numbers on the iPhone 6 out there right now, analysts estimate that, in the U.S., approximately 26 million phones are expected to be sold in 2015. We know that they sold 10 million of those devices in its first four days on the market. Similarly, while we don’t know exactly how many people have downloaded Apple Pay as of yet – we do know that over 1 million people downloaded it the first weekend it was on the market and we have a number of issuers, e.g. Chase and Bank of America, who each report more than 1 million downloads of the digital wallet to date.

Apple, as mentioned, also has lots of payments information on file, with over 800 million iTunes accounts and cards on file registered with it. With the launch of the Apple Watch, Apple Pay will be able to add more account holders to those with iPhone 5’s (who will need the watch to make it work).

Apple’s Market Capitalization: $720.16 Billion

Big Drafts/Power Plays


There are so many big drafts/power plays associated with Apple since the announcement of Apple Pay in September 2014, that PYMNTS.com developed an entire tracker to keep up to date with them. In less than six months, Apple has enlisted all of the major card networks (except Discover), hundreds of banks and credit unions and the hearts and minds of the entire technology and financial services press. Apple doesn’t have to market Apple Pay, we are doing it for them.

And while it can’t quite be said that Apple put mobile payments on the map – mobile payments’ ignition was being forecasted long before Apple Pay strode onto the scene – but it certainly made paying by phone something non-tech geeky people living outside of Silicon Valley, Austin, Boston or New York could relate to. Moreover, Apple made the concept of the encrypted data token and biometric authentication those same people now talk about too, a concept that the card networks created and brought to life in its first commercial use case.

Perhaps Apple’s biggest effect, however, is in the sea change it has created throughout the ecosystem as a result of its mobile payments launch. Apple was also recently ranked the most innovative company by the Pii360 Innovation Index – an amazing achievement since Apple is a technology company. Its massive patent war chest related to payments, an area it has obviously been investing in for a number of years, was a key contributor to its top ranking.

Weak Spots


Adoption and usage. While Apple has gotten a lot of people to buy the iPhone 6, and even some to download Apple Pay – actually getting traction with users is turning out to be slow going, even for a company with a consumer base as fanatical as Apple’s. An InfoScout/PYMNTS study of consumer adoption reported that as of Black Friday, 91 percent of potential Apple Pay users had never so much as tried the service, according to InfoScout. By March 2015 that situation had improved some, but it was still the case that 85 percent of iPhone 6 users standing in stores that accepted Apple Pay hadn’t even tried it yet.

There was good news in the second InfoScout/PYMNTS report – those who used Apple Pay reported really enjoying it, and found it to be an improvement over card-based commerce. But that was still a small fraction of people. The majority of consumers reported they were already satisfied with the way they pay, or that they simply kept forgetting that Apple Pay was an option.

And that sluggish adoption by consumers won’t get much better unless more merchants get on board. While Apple Pay is showing up increasingly in apps like Target, Staples and Uber, it is still usable in less than 3 percent of brick and mortar retail locations.

Apple also is running into a security problem of sorts. While Apple’s payment security protocol is very strong, as it turns out, the process by which cards are entered into the wallet is more easily fooled by fraudsters using stolen card data. While Apple is not strictly speaking responsible for this alone, they are nonetheless experiencing what looks like the brunt of the fallout.

And, it has the not small issues of being locked into a very intense, if indirect, competition with its card network partners…

The Card Networks

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The card networks have been around for decades and drive trillions of dollars of transaction volume for consumers around the world. Visa, MasterCard, American Express, Discover – in that order – are the global card brands that power commerce for hundreds of millions of consumers.

Worldwide Card Stats (source Credit Cards.com)
Credit Cards
Visa 800 million
MasterCard 637 million
American Express 104 million

Debit Cards
Visa 1.3 billion
MasterCard 480 million

Market Cap
Visa ~$161 billion
MasterCard ~$101 billion,
American Express ~80 billion
Combined ~$342 billion (47 percent of Apple’s Market Cap)

Big Drafts/Power Plays


Many say that the card brands are the payments ecosystem power players. They set the rules, pricing and drive the standards. They have brand recognition and acceptance. They have dominated the physical card world for decades, as evidenced by their numbers!

Yet the card networks team is unusual in a strange category insofar as it is actually made up of many separate teams that are all competing with each other and adopting various strategies to advance their ends. What they have in common is the need to both collaborate with the emerging digital players – like Apple Pay, but also notably like Google Wallet, PayPal, Samsung, Amazon, etc in order to enable usage in those wallets – while standing out from behind the mobile wallets they partner with to remain distinct and independently valuable in the eyes of consumers. If not, they run the risk of helping their mobile partners get to scale on the compliant, user rich rails they’ve spent decades building only to have those partners dispense with them once they have a user base large enough that they either don’t need them or can marginalize their use and the economics that underpin them.

Still, each network has its own strategies for competing for share of digital wallet, as well. Visa has been pushing the mobile envelope actively and aggressively. So far 2015 has seen the world’s largest card network expand into 16 global markets with Visa Checkout, enable eCommerce during the Super Bowl, try to help cars buy food for their drivers, purchase offers platform TrialPay, and roll out a suite of payments services for banks worldwide that allows them to hook into Visa’s tokenization protocol via HCE.

We’re very excited about what Apple is doing,” Visa CEO Charlie Scharf said during Visa’s earnings call in January. “But we want to enable as many scalable solutions that have wonderful customer interfaces that adhere to the highest security standards. And we would expect to see a series of those in the next couple of quarters come to market."

MasterCard is following a similar but slightly different path in driving adoption of its MasterPass product. It is building out an ecosystem by enabling developers to avail themselves of MasterCard’s rails and other APIs that make it easy to embed MasterPass into apps that they are creating – making it easy for MasterPass and MasterCard products to find their way into the new commerce enabling opportunities that innovators dream up to solve new problems. MasterCard is in the midst of a worldwide Masters of Code HackaThon to bring visibility and access to their platforms.

As for AmEx…well, AmEx has also embraced Apple Pay in a big way with a user interface that many believe is the slickest and most polished of them all. Yet, Amex is kind of having a tough year given the loss of the Costco relationship and few other co-branded relationships and may be thinking about other things.

But perhaps the biggest collective roster move has been in the design of the network tokenization scheme that underpins Apple Pay which was its first commercial use case. This technology, which leverages the EMV technology standard, protects the integrity of the card and the transaction done via a mobile device with a secure element in it at a physical point of sale via an app. Yet tokenization is designed to secure much more than a transaction – it can be used to secure the digital identity of the consumer using a connected device that leverages this tokenization scheme. The networks provide this service on behalf of issuers, which some believe will centralize access to those tokens, and thus the identity of those consumers, at the network level.

Weak Spots


The card networks’ weak link is, ironically a function of their strong suit – their physical card and point of sale dominance does not translate automatically into a digital world.

Sure, network branded cards are accepted online, and in a desktop world typing in name, address, card number, CVV and expiry was annoying but doable. On smaller screens, and in the IoT world, it doesn’t work. The card networks basically ceded ground 15 or more years ago to Internet-spawned players like Amazon and PayPal who started in a digital world and had a decade-plus head start to getting consumers used to checking out with a click (or two) online.

For Visa and MasterCard – their essential problem, other than the issue of slipping into the background behind the mobile wallets they enable – is the simple fact that the premise of mobile payments seeks to disrupt and displace the product that they have been essentially peddling for half a century – the plastic card.

This leaves the networks with a really interesting challenge – they have to be in on the ground floor of manufacturing their own obsolescence so that they can guide the development of that product in such a way that does not render them obsolete.

And, add to that challenge, the fact that they don’t have a direct relationship with the consumer. Yes, they advertise to the consumer and build brand awareness, but don’t touch the consumer directly in any way. That’s what their issuer customers do. So getting consumers to use their digital products is something that they can only influence at an arm’s-length.

Device-Blind Division


Facebook vs. PayPal

The Device-Blind division is probably the most interesting study in contrasts running for the ring as its two strongest teams represent arguably the “most established” digital payments player and the freshest faced new competitor – PayPal and Facebook. While on the surface they seem like radically different businesses – they bring two interestingly similar strengths to the race.

First, both are household names, with large enthusiastic followings that facebook p2puse their services in an entirely device-blind way. Both PayPal and Facebook have both made comparably successful jumps to mobile from the desktop and neither Facebook or PayPal have any interest in participating in the Android-iOS showdown. Instead, both firms are perfectly happy to service Apple or Android enthusiasts so long as they want to move money around.

Both services are also notably distancing themselves from the credit rails. Facebook’s new P2P service is debit only, and though you can put a credit card in a PayPal wallet, PayPal customers also have the option of syncing up their bank account and paying directly that way.

PayPal: Pre-Game Report

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Often referred to as “the bank of the Internet,” PayPal has over 162 million active digital wallet accounts and is available in over 200 countries, according to its official reporting.

Additionally, PayPal allows payments in about 100 currencies, funds withdrawal in 57 currencies and hold balances in 26.

For now, PayPal is a sub-unit of eBay, which has a market capitalization of $69.7 billion

Big Drafts/Power Plays


Hands down, the biggest PayPal move of the year was the decision to spin it off from its longtime parent company eBay. PayPal, strictly speaking, doesn’t need eBay anymore with 70 percent of PayPal’s volume not coming from eBay, and 89 of the Top 500 merchants worldwide and 116 of the Top 500 in North America taking PayPal (online). And, in fact, eBay could be holding PayPal back, as sites that compete with the online marketplace are not always so keen to sign on with a competitors’ payment method. This frees PayPal up to deliver on the vision PayPal’s head of retail Brad Brodigan described to Karen Webster in a recent interview.

"We have a committed approach that is agnostic to platforms and across channels. We are focused on helping merchants to have flexibility, to differentiate their experience over other merchants. Whether that’s using PayPal as a payment method in a merchant application, to enable things like ordering ahead or to provide them with value with services such as loyalty or offers, we’re committed to working with our merchant partners in an agnostic way so they can, in fact, have a differentiating experience."

PayPal also recently snagged some big headlines with its acquisition of Paydiant, a white-label, cloud-based mobile wallet platform for retailers, banks and payment processors (as well as cardless ATM access). Paydiant allows businesses to build customized digital wallets on their platform in a way that is basically tech agnostic. It also gives PayPal a chance to strike rival service MCX – which Paydiant built.

By acquiring Paydiant, PayPal could simply offer merchants all of the paypal_paydiant_recodebenefits that MCX was designed to deliver (gift card, private label, demand generation, data analytics, and most important cross channel and cross mobile ecosystem reach) without having to pay to build, operate and support a network. And, that if MCX merchants wanted a network that could do all of that, they could now just cut out the middleman – MCX – and they’d actually have a network that also came ready built with 162 million customers with accounts ready to be used at those merchants.

Weak Spots


PayPal does great with online transactions, but up until now has struggled to ignite the real world part of retail. The Paydiant deal is a novel approach to solving that problem – but one that still needs to be borne out. Retailers now have a better reason to integrate PayPal into their full spectrum of transactions – online and real world – since PayPal can offer those customized retailer apps on an already established digital payment network. But that does not necessarily mean they consider that enough of a reason to get involved with mobile payments, which many seem on the fence about.

PayPal is also among the smallest players in the pond – and though it brings a significant head start to the mobile wallet race – it also faces off against companies with market cap eight to ten times the size of their parent company’s. It is also a company that entirely sinks and swims on its payments business, since that is basically what it is as opposed to other players for whom payments is a sideline that supports a main business.

Facebook: Pre-Game Report

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As of the third quarter of 2014, the last official report by Facebook, the social media platform had 1.35 billion active users worldwide – or around 1/7 of the world’s total population. If Facebook were a nation, it would be the most populous nation on Earth, with more people than China (with a little under 1.3 billion) and India (with just over a billion).

Facebook’s two chat apps are also rolling in users – WeChat has 500 million users while Messenger reportedly has 600 million (making them the fourth and third largest nations on Earth by population).

Facebook’s Market Capitalization: ~ 232 billion

Big Drafts/Power Plays


While most of the big plays we talk about are strategic or technological and the “drafts” mentioned are actually corporate acquisitions – Facebook made the most literally translatable to a sport metaphor move this year by drafting their main division rival’s coach – former PayPal President David Marcus.

Marcus left PayPal for friendlier pastures at Facebook in June 2014 to head up Facebook’s messaging division.

[pullquote]“We’re excited by the potential to continue developing great new messaging experiences that better serve the Facebook community and reach even more people, and David will be leading these efforts,” the company noted in a statement at the time.[/pullquote]

That move fully came into context in March 2015 with Facebook’s back-to-back announcements that it was adding P2P payments to its Messenger app (but not What’sApp) and that it was adding Messenger for Business functions so that consumers could use messaging for eCommerce.

This possibly fixes a previous problem FB has had with commerce – namely that people didn’t like feeling exposed while in the public square of Facebook, whereas Messenger apps are generally one-to-one experiences. It’s also a business model that has shown serious strength internationally, particularly with WeChat. Though the Chinese-based app started out for messaging, users now use it to hail cabs, pay bills and shop — and the firm that supports it has grown large enough to challenge global giant Alibaba on the domestic m-commerce front in China.

Weak Spots


Facebook is pronouncedly the newest player in town, and far from the first to the table with a free P2P payments model. Facebook faces off against PayPal – but also established firms like tech startups like Venmo, Square and a large variety of mobile banking products all formulated to do much the same thing. And while Mark Zuckerberg reportedly greatly admires WeChat, he does face the prospect of competing with them directly and they already have 100 million users outside of China.

And though Facebook carries with it a massive number of eyeballs – it does not have a strong track record of motivating those eyeballs toward shopping. Many firms have crashed and burned trying to enable social commerce, and while privacy was certainly a big issue (and one Facebook has perhaps solved) it remains to be seen if people really are using Facebook or its Messenger services when they want to shop or are thinking about commerce. ​

Dark Horse Division


 

MCX vs. Amazon

Not every team can win all of the games every season, and that pretty much sums up the Dark Horse division. MCX had the distinction of being hacked the week Apple debuted and then actually being compared to the Three Stooges by the paper of record. Amazon had the spectacular commercial belly flop that was the Fire Phone and the resulting beating their revenue took because of it.

But…the season is long and there are lots of 3-pointers waiting to be shot.

MCX: Pre-Game Report

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It would be easy to pick on MCX here because they haven’t launched yet and the scoreboard reflects lots of superfluous zeros – since they officially have no users or locations (other than what is in beta).

However the 20+ merchants that have signed on (exclusively as it turns out) with MCX represent $1 trillion annually in retail sales according to the company’s internal figures. A big chunk of that, of course, is attributable to its anchor tenant, Walmart.

MCX Market Capitalization: Unknown.

Walmart’s Market Capitalization: ~$264 billion

Big Drafts/Power Plays


Walmart does not own MCX, but they are the retailer primarily associated with this mobile payments scheme.

They are also occasionally connected to former Walmart CEO Lee Scott’s “holy war against interchange fees.”

[pullquote]“I don’t know that it will [be profitable] and I don’t care, as long as Visa suffers.” – Walmart CEO, Lee Scott[/pullquote]

Given its main backer’s lack of enthusiasm for the credit rails, it is unsurprising that MCX doesn’t appear to work with existing credit/debit products it seems, nor will it allow its member retailers to accept mobile wallets other than its own.

A fact that CVS and RiteAid learned the hard way late in 2014 when they briefly switched on Apple Pay, only to be reminded that the exclusivity deal they signed with MCX prohibited them from doing that. It wasn’t long before those retailers promptly switched off those NFC terminals denying Apple Pay users the chance to use their newfound payments method in their merchant establishments.

"The fact of the matter is that you’ve been caught two-timing with Apple Pay, and that’s clearly a violation of your contract with us. So, you better disable your terminals, and let your customers know that in six or nine months or sometime in 2015, we’ll give them something that they’ll love. So, just sit tight."

That was Karen Webster’s imitation of how the conversation between MCX and it various merchant partners might have gone leading up to the decision to flip the NFC switch to off.

And so far, with few exceptions, the merchants have sat tight, even though MCX has not so much made its debut.

Weak Spots


Well, just about everything else – most notably however they haven’t taken the field yet, and every day that they wait is another day all of their myriad competitors are signing on their users and their merchants are eyeing the door.

And while they have more or less gotten merchants to toe-the-line, the more/less balance is hazy in some cases. For example, Target does not take Apple Pay in store – but Target customers sure can use it for online purchases. And, its Chief Executive Officer, Dekkers Davidson, remarked that it would let its merchants out of their exclusivity clauses – an offer that it is rumored some are looking to take them up on.

Plus there is the potential death strike MCX has been dealt by PayPal’s acquisition of Paydiant, since Paydiant is the power behind the CurrentC wallet. If PayPal via Paydiant can offer all the benefits that MCX was going to, then it is hard to know what value proposition CurrentC can offer over dozens of individual retailer mobile wallets all powered on the PayPal platform.

Amazon: Pre-Game Report

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The inventor of one-click payments, Amazon has roughly 221 million active Amazon accounts with payments information on file, according to recent estimates. In addition, though Amazon has not released official numbers, there are an estimated 40 million to 50 million Amazon Prime customers worldwide – who spend more than twice what non-Prime customers do.

Amazon’s Market Capitalization: ~$271.5 billion

Big Drafts/Power Plays


Amazon’s big plays are legendary and could easily fill the remainder of this article, and probably several others. The company has made some interesting moves in eCommerce, particularly as it sees the success of the Prime Subscription services – and is now leveraging it out to other parts of the business. Kindle owners or app users can sign on for “Netflix for books” and gain access to a large library of free (and modern) titles for a $10 monthly fee, and the company is now offering “app bundles,” for a flat fee which will allow unlimited downloads of various apps. This is seen as a play to keep developers – who were less than enthralled with the payout in investing for the underperforming Fire phone – by giving them regular access to a presumably motivated group of app consumers (who theoretically could be motivated to pay later down the line).

The company has also been selectively releasing the Echo device – an IoT forerunner that allows users to make shopping lists (and complete orders) all on the go, through voice commands – and of course, it just acquired an IoT company, 2lemetry that will, surely, enable even more of those capabilities.

And of course, Amazon is, for American consumers, the Internet’s store. It’s where most people start their shopping search. It gave rise to the notion of “showrooming” a couple of years ago, when notably, consumers armed with smartphones would use stores to demo products that they bought from Amazon while standing in the store in front of the item. It owns a variety of e-tailer assets – think Zappos, ShopBop and a slew of others, and if rumors are to be believed, soon luxury e-tailer, Net-a-Porter. All products, of course, that Amazon will deliver in a flash, and if it has its way, via drone, soon.

Amazon’s real strength though is its ability to tuck its payments capability and user base into other services that eliminate the friction from everyday activities. Amazon Fresh is into online groceries and delivery in key geographies. It will launch its Angie’s List killer on Monday to enable the discovery (and payment) of tradespeople. It launched its own mPOS solution to enable its marketplace sellers (who now account for 40 percent of units sold on Amazon) to enable payment via Amazon in their physical storefronts. And, of course, Amazon is opening a brick-and-mortar location in New York, which could totally turn the concept of omni-retail on its head.

Weak Spots


Well, like Google, Amazon suffers from a little bit of the “fox in the henhouse” syndrome with respect to getting distribution of its payments mark outside of Amazon. Amazon is a fierce retail competitor and the fear on the part of retailers large and small is a loss of business to Amazon if they enabled acceptance on their sites. It’s made getting payments outside of Amazon a tough slog in merchant categories that feel they compete head-to-head with the giant marketplace.

It also didn’t really ignite P2P – shuttering its WePay service less than a year after it was launched. Though they pushed it, it just never really got any traction.

And of course there is the Fire Phone, which revealed Amazon’s main problem with both mobile payments and hardware – people like shopping on Amazon, but don’t really need a piece of Amazon-branded hardware to do it with. Amazon may want its devices – and payment pushes – to support its eCommerce business, but as it turns out, people so far have shown limited interest in supporting Amazon’s eCommerce business that way.

Getting To The Final Four


So you’ve seen the match-up, you’ve read the pre-game reports and you now know the PYMNTS Elite Eight better than anyone.

So who goes on to the next round and gets one step closer to the M-Pay Championship?

We have no idea, and that’s where you come in. We’re asking our readers to tell us who should win in each division. If you think our brackets are terrible and you want to send two teams from the same division on – let us know why.

We’ll tally the votes and let you know on March 30 – when the NCAA Final Four will be known – who you all picked to move on. You can email us at editorial@pymnts.com (please use the subject line PYMNTS March Madness), tweet us @pymnts or visit us on Facebook and post your picks on our wall.

We look forward to hearing from you. Game on. ​

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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