Square Has Already Won Mobile Payments. Here's Who Stands to Benefit

Source: Square.

Brandon Workman of Business Insider Intelligence thinks that Square and, more generally, card reader technology, has already won the fight for mobile payment dominance. 

But alas for Foolish investors, Square is a private company (for now). Where does that leave an investor to turn?

Opportunities abound in every corner of the payment processing universe
There are Square's competitors scurrying to catch up -- like eBay (NASDAQ: EBAY  ) subsidiary PayPal. These are the companies developing applications for smartphones and tablets that link either directly to a specific retailer or to a generic payment platform (like PayPal). Square has an early and dominant lead, but PayPal has the brand and existing customer network to find scale as the technology evolves.

Then there are the payment processing networks that facilitate the transactions between consumer and vendor -- the giants being Visa (NYSE: V  ) and MasterCard (NYSE: MA  ) . These companies maintain the vast systems that communicate with the consumer's bank or credit card company and securely transfer funds into the vendor's account. Of course, Visa and MasterCard don't provide this service for free. They act as toll collectors and collect a fee on each transaction. For these middle men, higher transactions, regardless of the source, are a good thing.

And, don't forget the vendors themselves, like Starbucks (NASDAQ: SBUX  ) , who are fueling growth by embracing emerging tech. Others have come into this space, but Starbucks has been far ahead of the curve. First came the Starbucks app, which allows customers to purchase their Grande Americanos via a QR code on their smartphone scanned at the point of sale. Then came the strategic partnership and investment in Square, further aligning Starbucks with the growth of mobile payments. 

In the video below, I interview Brandon to understand what he sees as the next evolution for mobile payments. Our discussion moves from the past to the present, and perhaps most interestingly, to a future of location-based, image-verified, and voice-activated purchases -- with Square and Starbucks leading the way.

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  • Report this Comment On December 23, 2013, at 4:54 PM, PhilipCohen wrote:

    Square is a great product, but its forte is for mobile merchants away from B&M landline, otherwise Square is simply another middleman, like eBay’s “PreyPal”, that rides on the back of the existing credit card systems via a credit card merchant account with a retail bank; they have no dynamic access to payers’ funds in bank accounts …

    “PayPal has the brand …” LOL

    eBay’s PayPal “pretend bank” is a clunky, unscrupulous, uninsured, virtually unregulated middleman operation. Due to their close association with the clunky, unscrupulous and atrophying eBay marketplace, their “brand” is becoming more and more tarnished every day …

    Hello "MasterPass"/“V.me”; goodbye clunky "PreyPal"—it has not been nice knowing you ... bit(DOT)ly/UVXx53

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