Mobile payments is the front-line for the battle of the brands. If we were looking at the biggest players a few years ago, we'd be talking about brands like Visa, MasterCard or American Express. The first companies that jump into mind today are Apple or Google. Microsoft proved long ago that whoever owned the desktop would own the entire ecosystem. Now, whoever owns the mobile device platform is going to be in control of payments of the future.
Traditional brands such as Visa, MasterCard, or American Express are running the risk of brand dilution. As of now, they're still a critical component of the ecosystem and they see a share of the revenue. Like fuel for an automobile, these credit cards are still being used in next-generation mobile payment platforms. However, they aren't at the forefront of people's minds whenever a mobile transaction is made. People aren't thinking to themselves, "I'm using my Visa Card." Instead, they're thinking, "I'm using Apple Pay."
The question at hand is how credit card issuers will respond to remain relevant. Will there be a point in time where mobile platform holders cut them out of the ecosystem entirely? There's a genuine possibility down the road that a company like Apple would decide to become the card issuer themselves. Apple would be in a position to remove most of the friction from the card application and enrolment process. Creating a new payment method could eventually become as easy as tapping a button on a mobile app. Once that happens, the process of going to a bank, filling out paperwork, and getting a physical card sent in the mail will seem downright antiquated.
Fortunately for Visa and MasterCard, we're not at that point yet. Brand equity is really strong at the premium end of the spectrum. Card issuers distinguish themselves by focusing on customer service and fraud prevention as opposed to simplifying vending machine purchases. The market will most likely always have a place for those brands and the features they bring to the table. At the same time, they're in for a bit of a wake up call when it comes to their company's brand identity and their standing in the ecosystem.
Early entrants in the payments space have struggled during the transition from online payments to mobile payments. Google has been in the market for some time now but they haven't had particularly strong adoption rates. The latest figures show that the number of Apple Pay transactions are in decline on a per-user basis. Even so, Apple is continuing to expand their market coverage by entering the UK market and bringing compatibility to additional point of sale devices. There's also been major buzz lately about Microsofts emergence into the mobile payments space. If you've been following the latest articles, you already know that Microsoft has applied for banking licenses in all 50 states of the US.
It's going to be quite an interesting time to come as we see these behemoths battling it out for brand equity. Time will tell which companies emerge as the victors.