The adoption of mobile wallet services, which let users store credit card details in virtual wallets to make online and mobile payments, is reportedly starting to take off in the US. A new survey from JiWire claims 37% of mobile owners used a mobile wallet in Q1, up from 11% in the previous quarter. The number of rival services available on the market is partially causing this growth, boosted by smartphone penetration and rising consumer awareness. MasterCard is the latest to join the fray with the launch of its PayPass Wallet service, as competition in the space heats up.
In terms of who will dominate the mobile wallet space, PayPal currently accounts for nearly half the market, with 46% of respondents who had used a mobile wallet accessing its service in the period. Amazon follows in second place with 29% of the market, followed by Google Wallet with 18%. The results suggest that established payment firms such as PayPal and Amazon, which have historically handled high volumes of online payments, are successfully migrating their customer base to mobile solutions.
However, they are facing growing competition as a number of players seek to enter the rapidly expanding market. Credit card companies are among the firms looking to gain a foothold, with Visa now launching a beta version of its V.me digital wallet in collaboration with retailer Buy.com in the US, with European release scheduled for later this year. Meanwhile, MasterCard is expanding its PayPass technology, which allows merchants to take payments from mobile devices in stores, to support its own digital wallet service. MasterCard is insisting that its PayPass Wallet is not designed to compete with Google Wallet, with which it is a partner, but is instead an attempt to make PayPass technology as prolific as possible in a bid to boost consumer uptake.
"It's all about partnering with the various stakeholders out there in order to provide the right solutions," mobile development VP James Davlouros tells StrategyEye. "Yes, there are various players; but I think it's about seeing the mobile payments space as a partnership or corporation. Of course there's going to be competitive solutions out there. Some of them will succeed to a degree and some will fail."