Making payments in a variety of seemingly similar yet nuanced situations has never been easier; however, underneath each rock that is unturned to make the lives of millions easier, lie dozens of new esoteric problems to be solved: crowdfunding via BitCoin, exchanging money via email, and sharing a round of drinks at a bar from your smartphone are just a handful of the solutions that have exploded onto the payments space in the past 12 months.
There is so much movement going on in the Payments space:
1) PayPal’s rising independence from eBay
At the intersection of the explosion of new currencies, new ways of exchanging money, new definitions of ‘sharing’, we have PayPal, a full-stack payments platform acquired by eBay 10 years ago, which has gotten to such an independence from the auction-house platform that shareholders are calling for a spin-off – or at the very least, that the company change its name from eBay to PayPal.
PayPal’s array of products – PayPal Beacon, PayPal Here, PayPal Blueprint for Developers, etc. – have extended its digital payments footprint into the physical world.
2) Apple Pay: be very afraid.
You’ve already given Apple your credit card information on iTunes, or to download an app, or rent a movie – now, Apple wants you to pay directly via Apple Pay, their brand-new one-click payments service. Apple Pay is a big enough threat that PayPal has been making claims against Apple’s security – a right claim given Apple’s recent scandal surrounding hacked iCloud accounts.
3) Stripe – sitting behind Twitter, Facebook & Apple
Earlier this week, word broke that the famous Facebook “Buy” button would be coming to the platform, powered by Stripe. Earlier this month similar news came that Stripe would allow advertisers to enable users to buy in-stream, and would also be one of Apple’s partners for Apple Pay.
Save for a B2C application for end-users, Stripe is a major threat to PayPal, and even to the very partners it has begun working with. One or two strategic acquisitions could land Stripe in the palm of your hands tomorrow.
Vertical payments startups need exits, and the market needs consolidation
There are too many players, and too many niche products that force end-users – enterprise or consumer – to bounce around multiple players to handle all the different use-cases for payments. The Payments space is admittedly a complex one – dealing with financial regulation, sitting inside archaic banking platforms, exchanging currencies and managing governments – however, many of these barriers have been addresses, mastered, and standardized, which is why so many new players are coming in.
Similar to the Advertising space, the barrier to entry has dropped, and, at the same time, the market is changing so quickly that anyone who sees where the puck is going can nudge their way in. In a similar vein, these startups are not standalone public companies; therefore, exits are required. Expect increased acquisitions in this space in the coming 18 months, and expect a few keys players to emerge – either the aforementioned giants, or a new player, who will seize an opportunity to grow through consolidation, bringing together different moving parts into a greater whole.