Amazon, Paypal, Square and perhaps Facebook are engaged in what promises to be an intense “wallet war, ” a term coined by Steven Bertoni of Forbes. Paypal has been the leading player in online payments, but now Amazon has released its Local Register service which charges lower rates per transaction than Paypal and Square. This credit card reader for businesses is offering an aggressive promotion at slashed rates for those who sign on before October 31; 1.75% per swipe until January 1, 2015, when it will rise to 2.5% per swipe. Paypal charges 2.75% and Square, 2.7%.
The stocks of companies involved responded to the news, with Amazon rising 3% on Wednesday and Ebay, which owns Paypal, falling 1.5%. Square is privately-held and was founded by Jack Dorsey of Twitter. Mobile payments are expected to increase astronomically in the coming years, and are projected to rise to $720 billion by 2017 compared to $235 billion in 2013. Dominance in this area doesn’t just mean raking it in through transaction fees, but also gaining consumer data and having a larger reach in focused advertising. There is talk that Facebook might be jumping into the wallet race, since David Marcus left Paypal for Facebook Messenger. And with these huge players involved, can Apple and Google be far behind?