Mobile payments no fee startups still no competition for PayPal

Paypal Mobile Payments

Even though the services may cost less, these new and smaller companies are no match for the current giant.

Although the use of mobile payments hasn’t taken off nearly as quickly as many in the industry had hoped or expected, PayPal is still managing to hold its own, and to thrive, particularly when compared to the many startups that have tried to carve their own slice of the market.

Even though consumers aren’t using the services very much, the market from the provider side is becoming crowded.

Venture capitalists are pouring their investment dollars into mobile payments startups that are now inundating small businesses in order to try to get themselves off the ground and make a considerable amount of money. Some of them are offering their services without charging any fees at all.

Paypal Mobile PaymentsThe problem with the no fee strategy for mobile payments is that the startups don’t make money.

Companies that are continually being thrown various offers that promise to beat what other mobile payments companies are providing, are becoming very aware of the problem with that business model. Not making money is actually a rampant problem among startup businesses in that market. Particularly as they are competing directly with far more established giants such as PayPal and Square, in addition to the traditional providers of card terminals such as First Data Corp.

Each of these different mobile payments businesses are trying to grab hold of their own piece of the global market, which is projected to grow to $235.4 billion in transactions worldwide, this year. This would represent an increase of 44 percent over the figures from last year, according to the data presented by Gartner, Inc. This figure included bill payments, money transfers, and purchases of merchandise.

Even Seth Priebatsch, the SCVNGR Inc. chief executive officer and maker of the mobile payments application called LevelUp has called this market a “commodity business.” The massive level of competition is far from the only challenge being faced in this market. Business practices have not been properly polished, meaning that screening processes for business customers are inadequate, leading to losses and increasing risk of future losses.

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