Deal growth in the mobile payments space has decreased 30% YoY. Are investors tiring of the hype around mobile payments?
It seems every year in the recent past has been the “year for mobile payments.” Each year, the promise and allure of mobile payments grows, but is it really taking off? While the payment space overall has grown from an investment funding perspective, mobile payments investment activity has actually contracted in the last year as shown below.
Specifically, mobile payments includes the following technologies:
- Point of Sale Hardware – Point of sale terminals in brick and mortar stores are more accessible due to mobile solutions, both chip and pin and magnetic stripe scanners for smart phones.
- Near Field Communication & Digital Wallets – NFC, or near field communication, is a set of standards for establishing connections between devices through touch. The increase in NFC presence at brick and mortar point of sale terminals has created the need for digital wallets which store credit cards and interact through NFC to facilitate payments
- P2P Transactions – Many new companies have tried to tackle the ease of P2P mobile payments, using the Automated Clearing House to process transactions directly from bank accounts rather than using credit cards to minimize fees.
- Direct Mobile Billing – Popular in Europe and Asia, direct mobile billing allows users to charge purchases directly to their cell phone bill, minimizing risk exposure by publicizing credit card numbers.
Mobile payment investment trend (last 2 years)
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Over the past two years, mobile payments deal growth has been anemic and funding, outside of a few large transactions to “rockstars” in the space has also been poor. In fact, there has been a massive decline in both the number of deals and funding, -30% and -23%, respectively. While the promise of mobile payments remains, could it be that investors are just tiring of the “year for mobile payments” never seeming to arrive?