PayPal Leads The Charge In Mobile Payment, Will Hit $3B Total In 2011

by Gaurav Kheterpal on June 27, 2011

Mobile payment is the next big thing – we’ve been hearing this one for awhile now. Last month, my fellow blogger Matt Klassen made an attempt to uncover what’s taking the mobile payment revolution so long? While the various mobile payment systems are all still largely in their infancy, many have touted near-field communication (NFC) technology as the clear winner.

Google’s new Google Wallet mobile payment program unveiled last month, caused quite a stir, not because it has revolutionized the way we interact with merchants, but because its been allegedly stolen from PayPal. Some experts believe Google played dirty and Google Wallet is likely to hurt PayPal big time.

Setting aside the controversy over Google Wallet, PayPal – the ‘Big Daddy of Online Payment’ says it will process $3 billion in mobile-device payments this year, up from the company’s previous projection of $2 billion.

PayPal says it’s currently processing $10 million a day in total mobile payment volume, up from $6 million in March. The company says the rate at which people are using the payments technology to buy items via their mobile phones is growing rapidly. In fact, this is the third time that PayPal had to update our mobile 2011 projections. PayPal currently has eight million mobile customers, up from a previously reported six million users.

The $3 billion in mobile payments includes money transfers (free except for cross-border transactions) and purchases on mobile online-commerce sites (fee for each sale). While PayPal reined as the undisputed king of online payment for long, if faces tough competition in mobile payment from competitors that include Google and Square, as well as credit-card companies.

Google Executive Chairman Eric Schmidt expects widespread adoption of mobile payments in the coming year. Wallet includes a free mobile app that currently lets Sprint Samsung Nexus S 4G smartphone owners use their phone as a wallet at some 20 retailers and restaurants. Google also announced that it is testing NFC base stations in Japan that let consumers tap the base station with their NFC-enabled phone to leave a rating or review for the place where the station is located.

Visa is leaving no stone unturned to promote its NFC offering – PayWave. The company has devised a way to make every smartphone NFC ready right now, by selling an NFC-enabled microSD (Secure Digital) removable chip that slips into the SD slot in the back of your phone, or in the case of the iPhone, a special plastic skin. There are rumors that Verizon is working to develop a new mobile payment platform with a company called Payfone to develop its own platform.

There’s no doubt that PayPal Mobile holds an early mover advantage over Google Wallet. Google is trying hard to win the hands of retailers and merchants. It’s difficult to predict who will emerge the long-term winner in the keenly contested mobile payment space but PayPal seems to hold the pole position for now.

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.comby: RSS,TwitterFacebook, or YouTube.

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