It's an exciting time in the world of payment processing and other financial technologies. There are literally thousands of financial start-ups, each with innovative ideas and products.
Here are three that our analysts believe could have a big impact this year.
Leo Sun: BillGuard, a mobile app launched in 2013, uses an algorithm to monitor credit card accounts for fraudulent charges, billing errors, hidden fees, and scams.
As of October 2014, the company has flagged over $60 million in suspicious charges for users on over $1 billion in monitored transactions. It also notifies users if they recently shopped at a retailer that has experienced a data breach, and can directly connect users to retailers to dispute a charge. BillGuard also helps financial institutions spot these charges, which can lower their transaction inquiry and dispute processing costs.
In an age when Target, Staples, and Home Depot have been crippled by data breaches, telecom giants such as AT&T have been found guilty of charging hidden fees, and millions of credit card numbers have been stolen by foreign hackers, BillGuard has become an ideal "firewall" for credit card users. Last year, BillGuard and Aite Group reported that one in three American credit card users receives at least one "gray" (unwanted or hidden) charge annually, at an average cost of $235 per year.
Looking ahead, BillGuard and similar apps will change how both consumers and companies handle money. Hopefully, consumers will be better shielded from hackers and unscrupulous companies, while becoming more informed about their account activities.
Matt Frankel: One financial start-up that I have my eye on in 2015 is LoopPay, which provides products intended to address the main problem with Apple Pay and other near-field communication payment systems -- you can't use them in too many places yet.
Specifically, the LoopPay device is designed to be backward-compatible with "legacy technology" -- card readers not equipped to accept near-field communication. The system fits over a smartphone, and the user's credit card information is loaded on the device.
Then, when shopping, the customer simply holds the device near the retailer's payment terminal and hits the payment button. The terminal receives the customer's credit card information just as if the actual plastic card had been swiped through the machine. Users can input all of their credit cards, as well as gift cards and loyalty program cards -- pretty much any card with a magnetic strip.
LoopPay says its products can be used at 90% of U.S. retailers, which translates to about 10 million different merchants. Plus, Apple Pay is currently compatible with just two devices (the iPhone 6 and 6 Plus), while LoopPay can be used with any iPhone version 4 or higher and the most popular Android phones.
Apple Pay is a revolutionary product, but its usefulness will be limited until the hardware in use at merchants all over the U.S. catches up with its technology. And this is exactly why LoopPay's product could really catch on in 2015.
Dan Dzombak: If you have ever exchanged currency or wired money abroad, you likely are aware of the high fees and poor exchange rates that most providers offer. These fees, and particularly the poor exchange rates, can cost anywhere from 3%-5% of the value of your money transfer, making huge profits for companies such as Western Union and MoneyGram International.
Now 3 years old, TransferWise is a peer-to-peer money transfer service that charges a low fee, generally about 0.5%, and cuts out the middlemen to get you the best rate possible. While transferring money through its site won't feel different from regular money transfers, the magic happens behind the scenes. TransferWise connects you with millions of other people and businesses ready to transfer money between currencies, cutting out the banks that charge high rates.
Founded by the first employee of Skype, TransferWise initially operated between the U.K. and EU and has since expanded to other currencies, including the U.S. dollar in 2012. Its mission of low fees and transparency has attracted the backing of Peter Thiel, Richard Branson, Index Ventures, Sequoia Capital, and other high-profile technology investors. If you ever have to transfer money internationally, save yourself a bundle of money with TransferWise.