Money in the payment industry is not just in the core transaction fee. In fact, that fee is distributed mainly by the FIs and the payment networks and there is very little room for a new entrant to take any share from that fee.

There is big money in understanding the consumer behavior (who knows this fact better than Google?). Companies want to know what people buy, when they buy, how they buy and what motivates them to buy.  Payment anyway comes only at the last segment of that transaction.  What if this payment function is tightly integrated with the rest of the buying process such as product discovery, product information, product comparison, buying decision, etc..?

That is how companies like Facebook, Google, Amazon and Apple are trying to get into the payment industry.  With the valuable services they already offer to consumers, they are tracking the customer behavior. By providing a wallet service on top of their service, they CAN influence the way the consumers do the payment.

Once you have an influence over the way the consumer pays, you can be a significant player in the system.  In this case, it is better to “be a wallet” rather than be “in a wallet”.

Only companies with existing ecosystems with huge number of consumers and merchants can play in this area. Facebook (with 900 million users), Google (with over a billion users) , Apple (with 250m customers)  or Amazon (with 150m customers) or even the incumbent Paypal (with 120m customers)  have a good chance of providing this wallet service and be a significant player.

Big ecosystem entrants

Well, the other incumbents are not behind in the wallet race. Visa (with V.me wallet) and American Express (with Serve Wallet) have already started trails.