The 14th Annual Field Guide to Innovative Payments

It’s May, and that means it’s time for our annual exercise to seek out and describe the nonbank players, apart from the big networks, that are rewriting the rules for the digital exchange of value.

Since 2004, Digital Transactions has traced the course of payments innovation through its nimblest practitioners—the startups, the fintechs, the smaller networks, the nonbank arrivistes—and their services and products, their strategies and tactics, their successes and pratfalls. In 2009, we distilled what we were learning about these innovators into a handy guide inside the May issue, and called it a “field guide” to what were then known, somewhat cheekily, as alternative payments. Well, the guide worked out so well we decided to update it every May. And so you now hold in your hands the 14th edition. We dropped the “alternative payments” rubric two years ago and renamed our effort as a guide to innovative  payments. We think the new adjective better fits our purpose in sorting out the varied new pathways the nonbanks, and yes, banks and major networks, are forging for the payments business.

The guide is as much about strategies and tactics as it is about emerging technology and new markets. We invite you to read this guide much as you have since 2009, with an eye to how it might inform your decisions, sharpen your competitive instincts, and bring to light, perhaps, some developments you had not encountered before—as well as spotlight some potential partners.

Digital Transactions generally defines an innovative payment system as any network, concept, or consumer interface (a mobile app, for example) that enables payments in a way that relies on or stands apart from a major network and/or stands between that network and the consumer in an important way. We emphasize consumer-facing payment systems, but of course many, if not most, of the systems profiled here market themselves to merchants to maximize acceptance of their products.

Information for the listings comes from news reports over the past year, company Web sites and spokespersons, and financial filings in a few cases. The “Year Founded” line refers to the year the particular service was founded, not the parent company, except in those cases where the two coincide.

Alipay
Parent: Ant Financial Services Group
Headquarters: Pudong, Shanghai, China
Founded: 2004
Web: global.alipay.com/index.htm
Field Notes: In September, J.P. Morgan Merchant Services, the biggest U.S. processor of card transactions, announced it had started processing credit card payments in the U.S. for the massive Alibaba.com online marketplace. As part of the arrangement, Chase said it is working with the mobile and online payments provider Alipay to manage transactions on the massive business-to-business platform. China-based Alibaba Group Holding Ltd., which operates Alibaba.com, holds a 33% stake in Alipay. Chase Merchant Services pointed to a potentially massive opportunity in processing card transactions between businesses operating on the Alibaba marketplace. The deal is also expected to help Alibaba.com increase its share of payments by U.S. firms. The collaboration is expected to help small businesses, in particular, in managing a variety of payment methods. It is also expected to help Alibaba.com in increasing its business in the U.S. market. Founded in 2004, Alipay has grown into what is said to be one of the largest mobile-payments services globally. It has also made prior moves to penetrate the U.S. payments market, including a deal with the Guess? Inc. chain  in 2018. Before that, it had concluded a deal to collaborate with the big U.S. processor First Data Corp., now part of Fiserv Inc., to process mobile payments for U.S. sellers that attract significant numbers of Chinese tourists.

Amazon Pay
Parent: Amazon.com Inc.
Headquarters: Seattle
Founded: 2007 (including predecessor services)
Web: pay.amazon.com
Field Notes: Amazon has been remarkably quiet in recent years about its digital wallet, Amazon Pay, while at the same time forging ties with other prominent payment players, including Affirm and Venmo, and scuffling with Visa over acceptance costs. But the online checkout has become crucial territory contested by countless payment providers, so Amazon can’t be complacent. It is pouring resources into making sure Amazon Pay stays relevant to consumers. The wallet, which allows users to store credit and debit cards, includes the ability to pay by voice via Amazon’s Alexa technology. Alexa can also alert users when a delivery is made or when a bill comes due. Amazon Pay Deals, meanshile, presents offers meant to be exclusive to users

Apple Pay
Parent: Apple Inc.
Headquarters: Cuperino, Calif.
Founded: 2014
Web: apple.com/apple-pay
Field Notes: The battle of the mobile wallets remains a battle for users, and in this contest, Apple Pay appears to be winning. Some 97% of retailers said they accepted Apple Pay, according to the 2021 Omnichannel Retail Index, released in September by the consultancy FitForCommerce and the National Retail Federation. By comparison, Google Pay’s coverage was 64% and Samsung Pay’s was 59%. Other good news for Apple—and for its big rivals Google and Samsung—is that 84% of merchants in the survey said they accept mobile payments, up dramatically from 56% in 2020. The pandemic had a lot to do with that. But Apple continues to face challenges over its walled-garden approach. In one case, an Australian Parliament committee last summer held a hearing looking into Apple’s policies on accessing the secure element for payments services on its phones. Apple argues its hardware-based interface is more secure than one based on software, but similar inquiries have cropped up in Europe.

BitPay
Parent: BitPay Inc.
Headquarters: Atlanta
Founded: 2011
Web: bitpay.com
Field Notes: BitPay is riding the rising wave of interest in cryptocurrency. It scored a major coup at the point of sale in September when it announced a collaboration with Verifone to allow U.S. merchants using Verifone devices to accept as many as 11 cryptocurrencies, including stablecoins, in-store and online. BitPay’s wallet lets merchants accept Bitcoin and other digital currencies, but converts the crypto into fiat currency when crediting the merchant. The deal could have broad potential, as Verifone’s installed base of terminals includes 35 million devices in 150 countries. In February, BitPay signed a  deal that allows streaming service Sling TV to accept seven digital currencies and five stablecoins from subscribers.

Blockchain
Field Notes: After more than a decade of skepticism, 2021 was the year that major payments companies began preparing to process cryptocurrency on a commercial basis. Both Visa and Mastercard built blockchain capabilities and forged alliances with exchanges and crypto-focused banks to build the foundation for payments via their networks. At the same time, the concept of stablecoins started to take hold, with the Federal Reserve laying out preliminary thoughts on how a U.S. digital currency—with or without blockchain as its basis—would function and the advantages and drawbacks it would offer consumers, businesses, and government entities. Privately issued stablecoins, meanwhile, encountered considerable skepticism as regulators and critics feared the coins were insufficiently backed by actual assets.

BNPL
Field Notes: The buy now, pay later product is credit for people who don’t want—or can’t get—credit cards. Its key appeal is to younger consumers who can’t qualify for credit cards or who don’t want to get enmeshed in complicated repayment terms. BNPL, which functions online and in stores, has been around in various forms for decades but took off at the onset of the pandemic with a simple proposition: Take the product and pay us back in three equal installments over a six-week period, at no interest. The easy credit and straightforward proposition carries huge appeal, but has also drawn the attention of regulators. The Consumer Financial Protection Bureau demanded information from major providers Affirm, Afterpay, Klarna, PayPal, and Zip. Under its new, activist director, Rohit Chopra, the bureau is concerned that those easy terms could draw consumers into levels of debt and other costs they may not be able to handle.

C-Store Wallets
(Cumberland Farms Inc., Exxon/Mobil Speedpass, Gulf Pay)
Field Notes: Finding perks that drive loyalty and making it easy to earn and redeem points are key for convenience store operators offering mobile wallets. Exxon/Mobil SpeedPass, for example, allows wallets users to earn points on fill ups, convenience store purchases, and car washes at participating stations. Cumberland Farms SmartPay Check-Link payment program enables users to pay for gas and in-store purchases, and in most cases automatically save 10 cents on every gallon of gas. Gulf Pay allows users to find the nearest Gulf gas station, pay for fuel at the pump, and purchase products inside the convenience store.

Cash App
Parent: Block Inc.
Headquarters: San Francisco
Founded: 2012
Web: Cash.app
Field Notes: Originally known as Square Cash, Cash App is a mobile-payment service that allows users to transfer money to one another using a mobile-phone app. Cash App users can also or buy stocks and Bitcoin directly from their phone. The service is available in the United States and the United Kingdom. Block chief financial officer Amrita Ahuja told equity analysts in an earnings call in February that Cash App is generating a 22% annual growth rate and has 44 million monthly active users. The CFPB, as well as attorneys general from multiple states, have requested information from Block related to how the company handles complaints and disputes from customers using its Cash App wallet.

Clover
Parent: Fiserv Inc.
Headquarters: Sunnvale, Calif.
Founded: 2012
Web: Clover.com
Field Notes: Clover, Fiserv’s point-of-sale technology for all businesses, accounted for $1.3 billion in revenue last year, representing a 27% compound annual growth rate from $800 million in 2019. Hardware sales are decreasing in importance, accounting for 16% of that revenue last year, down from 19% two years earlier. Payments services and software delivered the remaining revenue share. The merchant base for Clover now stands at 560,000, with the fastest growth coming among restaurants. Crucially for Fiserv, almost 90% of the Clover clients are new to the processor. Now Fiserv is focused on integrating BentoBox, a recent acquisition, into Clover. BentoBox specializes in restaurant technology, serving some 14,000 locations. To help meet an ambitious growth goal, Fiserv is relying on independent software vendors and a planned launch in India, Brazil, and Australia.

Google Pay
Parent: Alphabet Inc.
Headquarters: Mountain View, Calif.
Founded: Android Pay, 2015; Google Wallet, 2011
Web: pay.Google.comGoogle Pay
Field Notes: Expanding the utility of the Google Pay wallet remains a primary focus for Alphabet Inc. A deal with Marqeta Inc., provider of an open-API platform that enables companies to create, issue, and deploy virtual and physical payment cards, paved the way for Marqeta to issue a tokenized virtual Google Pay card to entice consumers to use Google Pay more often for day-to-day purchases online and in-store. Similarly, a partnership with digital-asset marketplace Bakkt allows consumers to load their Bakkt Visa debit card into Google Pay and use the crypto-backed cards for online and in-store payments where Google Pay is accepted.

MagicCube
Parent: MagicCube Inc.
Headquarters: Santa Clara, Calif.
Founded: 2014
Web: MagicCube.co
Field Notes: Magic Cube’s vision of turning mobile devices into tap-and-go POS terminals got a big boost from its deal with i-Accept Cloud, an open, cloud-based softPOS acceptance platform. The deal will simplify creation of new merchant payment-acceptance and digital-commerce solutions by connecting acquiring banks, payments-system providers, and merchants—which are siloed within the payment-acceptance chain—into a software-based cloud model not tied to legacy hardware or bound by a specific device maker, its operational system, or payment card network. Investors remain bullish on Magic Cube’s prospects, as evidenced by a $15 million funding round led by Mosaik Partners.

Merchant Wallets
(Dunkin/DD Perks, Kohl’s Pay, Kroger Pay, Starbucks Rewards, Target, Walmart Pay).

Field Notes: Mobile wallets offer merchants a perfect mix of technology and innovation to stay ahead of the curve in the rapidly evolving world of digital payments. For example, many, if not all, of the merchants in this category enable their wallet users to pay online or in-store using a one-time quick-response code that securely transmits payment and loyalty information at checkout. In terms of the number of wallet users, Starbucks remains a force. During the first quarter of fiscal year 2022, ended Jan. 2, Starbucks reported 26.4 million active rewards members in the United States, up 21% year-over-year.

Open Banking
(MX Technologies Inc., Finicity, Plaid Inc.)

Field Notes: The three fintechs are aggressively building momentum behind open banking. MX and Finicity inked deals this year to integrate their technology with Fiserv Inc.’s platform. MX also partnered with Qolo, an omnichannel platform provider to fintechs. The deal allows Qolo to leverage MX’s aggregation services so it can provide application programming interfaces through its platform that allow users to open and view accounts, make deposits, and move their money. Plaid has integrated Green Dot Corp.’s GO2bank mobile-banking app with the Plaid Exchange network, enabling Green Dot’s app users to connect to more than 6,000 other apps and services.

ParkMobile
Parent: EasyPark Group
Headquarters: Atlanta
Founded: 2008
Web: ParkMobile.io

Field Notes: Since being acquired by EasyPark Group in 2021, ParkMobile LLC has continued its expansion throughout North America. Through the first four months of 2022, the provider of smart-parking and mobility solutions has deployed in several new cities, including Cedar Rapids, Iowa; Forth Worth, Texas; and San Luis Obispo, California. The company has also expanded existing agreements with several clients. In April, for example, ParkMobile grew its partnership with Diamond Parking, a multi-national manager and operator of parking facilities in the Western United States and Canada. Through the expanded partnership, ParkMobile is available at more than 800 Diamond Parking locations.

PayPal
Parent: PayPal Holdings Inc.
Headquarters: San Jose, Calif.
Founded: 1998
Web: PayPal.com

Field Notes: With a new focus on consumer engagement, PayPal is looking to get more revenue out of its most active users. PayPal says most of its volume comes from one-third of its customers. The emphasis on consumer engagement means PayPal won’t be throwing marketing dollars at low-value customers, says CEO Dan Shulman. PayPal reported 426 million active accounts in 2021, up 13% year-over-year. PayPal’s active user base performed 45.4 transactions per account in the fourth quarter of 2021, up 11% from a year earlier. PayPal’s super app, which launched in 2021, is generating twice the company’s average revenue per active account.

Revolut
Parent: Revolut Ltd.
Headquarters: London
Founded: 2015
Web: Revolut.com

Field Notes: Building on its core money-transfer capabilities, Revolut earlier this year began enabling customers in the United States to transfer money to bank accounts in Mexico, fee-free, within 30 minutes. U.S. customers can make 10 international transfers per month to any bank account in Mexico. The potential volume that Revolut can unlock by enabling cross-border remittances between the U.S. and Mexico is substantial. In 2021, more than $45 billion was sent from U.S. consumers to recipients south of the border. Since its launch, Revolut has attracted 18 million customers globally, who generate more than 150 million transactions a month.

Samsung Pay
Parent: Samsung Electronics Co. Ltd.
Headquarters: Seoul, South Korea
Founded: 2015
Web: Samsung.com/us/samsung-pay/
Field Notes: Samsung Pay allows consumers to make purchases using compatible phones and other Samsung devices. The mobile wallet supports contactless payments using near-field communication and magnetic stripe–only payment terminals by incorporating magnetic secure transmission. Samsung Pay supports cards from more than 1,000 banks and credit unions. Among the mobile payments providers, Samsung Pay is unique in that users can tap to pay even if the point-of-sale device does not have a near-field communication chip. Samsung Pay offers Vaccine Pass for consumers to tote their health records with them. Now in its second year, Samsung Money by SoFi offers users a debit card backed by a cash-management account.

Secure Remote Commerce (a.k.a. Click to Pay)
Parents: American Express, Discover, Mastercard, Visa
Headquarters: N.A.
Founded: 2019
Web: EMVCo.com
Field Notes: Secure Remote Commerce is not so much a brand as a behind-the-scenes digital-payment mechanism developed by EMVCo, the standards body controlled by the global payment card networks. Referred to as “click to pay” by the networks, SRC’s purpose is to replace the clutter of payment brands on e-commerce checkout pages with a common buy button that offers a unified and simple purchase process. With e-commerce booming, the simplified checkout is getting a workout. GoTab, a restaurant commerce platform, recently announced it would add Click to Pay capability to its service to make checkout easier for hospitality consumers.

Tappit
Parents: Tappit
Headquarters: Leeds, England
Founded: 2017
Web: Tappit.com
Field Notes: Tappit has been a roll, striking several deals with professional sports teams to implement its contactless mobile payment application. It landed a major contract supplying payments and incentives services through the introduction of a SoFo Stadium wallet to the stadium’s app. By scanning a QR code while in the SoFi Stadium Wallet, users can easily pay for their food, drinks, and merchandise quickly and efficiently – without the need for cards. The data and insights around that behavior and consumption that can only be delivered through Tappit’s real-time data suite will give SoFi Stadium operators opportunities to understand their venue and their visitors, Tappit said earlier this year.

TouchBistro
Parents: TouchBistro Inc.
Headquarters: Toronto
Founded: 2010
Web: TouchBistro.com
Field Notes: TouchBistro, like many of its cloud-based point-of-sale system provider competitors, has continually offered services in addition to central payment processing. In early 2022, TouchBistro launched TouchBistro Marketing, a service to help restaurants create and manage custom marketing campaigns. Also, the company released its third annual State of Full Service Restaurants report that found that 74% of full-service restaurants managed to maintain or increase their sales during the pandemic. The report also found more than two-thirds (67%) of restaurants changed their point-of-sale systems in the past year, and nearly all full-service restaurants implemented some form of contactless payment.

Venmo
Parents: PayPal
Headquarters: San Jose, Calif.
Founded: 2009
Web: Venmo.com
Field Notes: As one of the many available peer-to-peer payment services, Venmo is more social focused than its competitors. In the fourth quarter of 2021, Venmo volume increased 29% to $61 billion and for fiscal 2021 its volume grew 44% to $230 billion. That volume could increase as other companies add Venmo as a payment, like PayNearMe did earlier this year. Notably, Venmo was added to Amazon.com as a payment option in the past year, too. For the past fourth-quarter holiday season, Venmo added a gift-wrap feature that enables sender to select an image to accompany the payment.

Visa Tap To Phone
Parents: Visa
Headquarters: San Francisco
Founded: 2021
Web: https://usa.visa.com/visa-everywhere/innovation/connected-commerce/tap-to-phone.html
Field Notes: Introduced in 2021, Tap to Phone is a point-of-sale payment-acceptance application that enables users of Android smart phones to accept contactless payments without requiring special hardware. Using a smart phone from ZmBizi LLC loaded with the POS app, 50 small businesses in Washington, D.C., will be able to accept payments without having to use a dedicated point-of-sale terminal. U.S.-based ZmBizi sells the devices for $296 or in four installments of $74. The Android smart phones operate on the AT&T and T-Mobile networks in the United States. ZmBizi developed the POS app for the devices, Visa says. The ZmBizi phones also can be used for voice calls, texting, and with other apps.

WeChat Pay
Parents: Tencent
Headquarters: Shenzhen, China
Founded: 2011
Web: pay.Weixin.qq.com/index.php/public/wechatpay_en
Field Notes: WeChat Pay’s North America presence is all about enabling acceptance for users, especially those hailing from China who vacation in the United States and Canada. To that end, WeChat Pay has struck several deals, such as one with 7-Eleven Inc. in Canada. Citcon USA LLC provides a service for merchants that enables WeChat Pay and other China-based wallets to be used at North American merchants. In early 2022, news emerged that Tencent was exploring whether regulators would require it to create a financial holding company for its fintech business, CNBC reported.

Zelle
Parents: Early Warning Services LLC
Headquarters: Scottsdale, Ariz.
Founded: 2011 (as ClearXchange)
Web: ZellePay.com
Field Notes: Peer-to-peer payment service Zelle has matured into a consumer favorite. In 2021, consumers and businesses sent 1.8 billion payments through Zelle during 2021, up 49% from a year earlier. Those payments totaled $490 billion, up 59%, from the previous year. In the fourth quarter alone, consumers and businesses initiated 502 million transactions totaling $137 billion. In 2021, payments received by small businesses increased 162% over the previous year. Merchants are helping to build consumer awareness for using Zelle beyond P2P payments by promoting its acceptance at the point of sale. There has been some bank interest is adopting Zelle for retail payments, but nothing certain is in development.