Sasha Kamenetska | Contributor
June 28, 2012

Finding the Winning Ingredient for the Mobile Payment Space


As the mobile payment market has been heating up in the past few months with more and more new entrants (RevCoin launched its mobile payment system at the beginning of June), it is important to ask, what will be the distinguishing feature among all these systems? It is easy to think about the cost to use each system as that distinguishing feature – and there has been a bit of a price war going on between some of the players in the mobile payment space. New and old mobile payment services are trying to lower prices to get more traction.

However, as those who are in the startup world know – if you are fighting it out on price, you will never win. Customers are generally willing to pay more for better quality (think Apple products). So, perhaps that is why Square, seemingly the front-runner in the mobile payment space, has not responded by lowering its price. Maybe it feels that it has a better quality product, with a better user experience and therefore does not need to entice businesses to use it by lowering it’s transaction costs.

Square is right – small price decreases by competitors should not make it too nervous if it has a good product. What should worry Square is the announcement that came from iZettle, the “Square of Europe,” this week. iZettle has released an iOS API that allows developers to integrate its payment platform right into their apps. An Andriod version of iZettle’s API is supposed to be released before the end of the year. Clearly, iZettle is choosing to gain traction via platform rather than through pricing cuts or device innovations.

This is big news and Square truly should be nervous. Square made an attempt at an API in 2010, but it never gained traction and has been quietly deprecated. Square claims it has no plans to renew its API program. That is a mistake. Although iZettle is only in a few countries in Europe right now, its API program will allow it to spread across boarders and continents. Entrepreneurs will be able to integrate the iZettle platform into their own apps anywhere on the globe. Developers will be able to create new use cases for mobile payments using the iZettle platform. iZettle has given itself the potential to expand a lot, and quickly.

Of course, just because iZettle released an API, doesn’t mean it will automatically be successful (as Square’s example proves). APIs are products and thus need to be promoted, supported and constantly monitored. But with the launch of its API, iZettle is certainly taking a step towards ultimate success. APIs will be a key ingredient in winning the war of the mobile payment space.