The Competitive 🐵 Landscape 🦁 of Payments 🦅
In this piece I will take an overview of the major players in the payments space. I will then explain a major dividing line between the two groups, and explain why I think only one company succeeds in transcending that line.
When I was collecting information for this piece, I was simultaneously reading a book about evolution (Darwin’s Dangerous Idea, if you’re curious.) So I couldn’t help think of a “competitive landscape” in those terms. I hope you’ll humor me as we explore the fauna of the payment ecosystem.
There are some majors at the top of the food chain: Venmo, PayPal, Alipay, and their ilk. The lions, tigers, and bears.
Is it competition for prey or territory that keeps them from a fight to extinction? A better story might be of a zoo: these beasts are contained in cages of iron, so the occasions for Alipay to flash its teeth at Venmo are rare. As custodial money transmitters, they are contained by geography. Centralization requires money transmission compliance, which is incredibly difficult to do with global coverage.
The other side of the landscape is the ungoverned lands of peer-to-peer payments. Bitcoin & lightning network, alongside Metacash, Abra, and Argent are a few of the known names in crypto payments. These companies are represented by smaller, less intimidating animals because they simply haven’t climbed far up the food chain. They benefit from being non-custodial in most cases, and therefore do not suffer the territorial barriers of the fearsome predators. But they usually fail to resemble money or be usable by anyone besides crypto enthusiasts.
Neither is an exhaustive list. That would be exhausting. Instead, I present a representative survey.
The Zoo Tour of Fiat Payments
Introducing the powerful jaws behind iron bars:
🦁 Alipay
With over 600 million active users in China, Alipay is the largest mobile payments platform and has been for the last 5 years. That said, while it has some marginal international developments, they are mainly for Chinese tourists to use point-of-sale at international merchants. Regulatory barriers keep them caged.
🐯 Venmo
is well-liked and offers great service to Americans, and works great for peer-to-peer payments. People even use it to pay rent. It is free and user friendly, connecting to US bank accounts in a few steps. Venmo succeeds in delivering a great user experience, including by offering social payments.
🐻 PayPal
is affordable in many cases and can be used to send money across borders, though not without caveats. It recently acquired Xoom, and they boast an average realized remittance fee of 3.93%. Still, these numbers can be misleading because they don’t include the times they were not used because they were too expensive. This can include cases such as in Argentina where PayPal doesn’t support bank accounts and must be routed through an expensive 3rd party.
🐵 Western Union
offers a cross-border payment service not only on a consumer basis but on a business to business level as well. Payments must run through a third party agent that is trusted to manage and securely deliver the payment for a fee. WU is one of the oldest, more established firms among its competitors.
🐠 Revolut
Looks to provide an alternative to banking products. Revolut provides the ability for international money transfers using real exchange rates without any remittance fees or overcharged exchange rates from brokers, undercutting competitors like Western Union and other third party agents. The company has over 4 million users, managing over a total of 350 million transactions since being launched in 2015
🐨 TransferWise
is a favorite for sending money abroad. It does require a bank account, but removes the bank as the middle man so that those transferring money internationally can access real exchange rates rather than a rate purposefully inflated by the banks themselves. TransferWise moves 4 billion euros on a monthly basis.
TransferWise requires bank integration on both ends, and is subject to cross-border controls. The people it serves are happy with it, but it remains inaccessible for a non-trivial number of people.
🐫 Reserve
Reserve is a notable stablecoin project in the crypto space. It will begin by holding USD in a trust, but then migrate to a “changing basket of assets in a decentralized way, but still stabilized in price with respect to the US dollar.”
They will, however, require KYC and thus cannot be said to be meaningfully decentralized. Using Reserve’s token would also require a high level of crypto savviness.
Out in the Wild — Borderless Payments
These creatures don’t face the same territorial barriers as above, but have thus far failed to climb the food chain:
🐸 Argent
is on the right track. They have learned that customers don’t want to deal with difficult keys & gas calculations, so they have abstracted them away. They have more intuitive recovery methods. Their wallet is not yet live, but their design seems to be a good first step for a new cryptocurrency trader. It should be easy for crypto fans to trade using their DEX and send crypto assets to each other using Argent. Finally, they have social and other forms of recovery.
It is, however, primarily intended for use by crypto enthusiasts.
🦔 Metacash
deserves an honorable mention. Metacash is a live, working “human friendly” DAI wallet. They allow for gas abstraction — You only need to have DAI on the wallet to use it, without any need for ETH.
Myself and a friend sent a dollar back-and-forth, but there wasn’t much left after that, unfortunately:
So it would be hard to fight their way up the foodchain because of UX and fees.
🐍 Lightning Network
Lightning network is built on Bitcoin. It is for this reason that it earns the position of snake, which is a formidable predator. It is still in beta, and by some accounts is not intended to compete with fiat payments. It is being built for Bitcoin users, and perhaps in preparation for a world that prefers Bitcoin as a medium of exchange.
🦒 Abra
Is the first global investment app (150 countries) that, after funding your wallet with bitcoin, allows access to the world’s stocks and other financial assets. Abra provides the flexibility to move assets quickly or add to your portfolio at a 0% fee and $5 minimum. The wallet’s interface is a simple to use platform that has been given a 5 star rating. Still, it is intended for the cryptocurrency audience.
🐭 TrustWallet
Is a mobile app that allows consumers to have access to and hold over 20,000 cryptocurrencies built on Ethereum in an individualized personal wallet. Recently acquired by Binance, TrustWallet is a secure, decentralized platform that allows access to other decentralized platforms directly from the app through its DApp browser.
🦅 The Power of Flight
So far we have surveyed the landscape. But there is something in the skies above.
The incumbents in traditional mobile payments and the up-and-comers in peer-to-peer are in a land war.
Only one — Mosendo — can take to the skies
We developed Mosendo to address the issues that hold back all the companies thus described: It is global and intuitive. Each of the listed payments companies struggle with one or the other of those issues. This will give us an edge-up in the long run over even powerful network effects.
Non-Custodial
When you use a licensed service to send money, that service takes your money onto its balance sheet until it is paid out. This is called custody. All of the services on the left are custodial money transmitters.
Mosendo is non-custodial. This means that when you send money to your mom, the money goes from being in your control to being in her control, without anyone else in the middle.
This is a fundamentally different relationship than you have with your bank, payments, or remittance services.
This non-custodial design is what allows Mosendo to be used by any citizens in any country. As far as the government of any country is concerned, this is the equivalent to handing cash from one person to another.
Looks like Money
Now, to the list in pink on the right side of the Venn diagram — Let’s consider my parents.
My mom and dad both use PayPal. I think within an hour I could get them using Venmo or Transferwise if they wanted to.
What is difficult to imagine, though, is getting them on board with a service on the right side. Now, they did raise me, so I would gladly offer weeks of technical support to get them comfortable with it. Neither of them have ever asked and I’d rather wait until a usable product is on the market to introduce them to crypto.
We want Mosendo to be as easy to use as any other mobile payments service that has wide adoption. Our three-word description is: “Global crypto Venmo.”
With Mosendo, the user experience comes first:
- Balance displayed in local currency
- Stable value
- Social network integration
- No ID required
- No bank account required
- Intuitive addresses
- Intuitive social recovery
- Almost instant
- Nearly free
If you’re interested in how we achieve these things, you can read up on it here.
Now — Who have we missed?
There is an up-and-coming player in the payments space that we haven’t mentioned here. We have decided they deserve their own attention on the matter — Update incoming.
Thanks to Rossco Paddison and Trenton McCarthy for their help on this piece.
If what we are doing resonates with you, there are a few ways to continue this conversation and bring this vision to life.
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