People still prefer to pay with debit and credit cards because it's just as easy as paying with their phones. The result is that mobile wallets have not gained critical mind share among the public. Some individuals may use it at their local shop once a day, but it's a rare person that actively pays with their smartphone wherever they go. This behavior is not going to change any time soon, which means mobile wallets like Square are going to continue to struggle—at least until a more legitimate, easy-to-use and cost-effective solution comes along.
Solution #1: PayPal-owned Venmo, one of the leading mobile P2P apps, says it saw $314 million in transaction volume on its app last quarter.
The problem is that there's little to no revenue earned by these mobile P2P apps in facilitating money transfers between people. But if an app like Venmo gets into the mobile in-store payments space — an area that still hasn't managed to take off — they stand to bring a big user base with them that's already comfortable paying via phone.
Solution #2: PayPal's Braintree, led by entrepreneur Bill Ready, a veteran of two payments startups, is the most prospective service.
Braintree won Airbnb, Uber, and HotelTonight, and bought Venmo, a startup whose person-to-person payment app competed with PayPal's basic money-moving service. Unable to catch up, PayPal bought Braintree for $800 million
Others.
Boston-based LevelUp (formerly SCVNGR) has an interesting business model based on low interchange rates and marketing plans for its merchant partners, but its transaction volume is too small to make much of a difference. Interesting technologies mixed with mobile wallets like Loop have gained some mind share within the industry, but awkward implementations and nascent products make it more of a dream than a reality.
The latest news on this front is that Microsoft is adopting open source Apache Cordova—commonly known as PhoneGap—as part of its Visual Studio integrated developer environment. PhoneGap is a service that allows developers to use Web properties like CSS, HTML and JavaScript to build Web applications and then "wrap" them to fit in the native app stores like Google Play and the Apple App Store.
