September 26, 2014
Let's take a slightly different perspective, just in case we are blinded by the sticker shock. Smartphone owners in the U.S. bought $500 million worth of goods and services using mobile wallet apps in 2012 (Berg Insight). So $4B++ has enabled around 40-50 mn subscribers (Google Wallets' 20 mn, ISIS might have reached 1 mn, Paypal, etc.) to complete around $1 billion transactions (assuming it doubled by now) using their phone. So the industry cost for every 1 dollar of mobile payments transaction is 4 dollars. And this 1 dollar is just gross transaction value, while the wallet companies will make a tiny (very tiny) portion of it. Justified? You decide. For comparison, the same ratio is likely inverted for premium credit card customers and for mobile subscribers. In some scenarios, several hundred dollars are made per dollar of acquisition costs over the lifetime of the subscriber.