the three, and we see Payleven is several notches below the two across the entire time period. iZettle signed two huge partnerships in 2012 with DZ Bank and Deutsche Telekom to make a push in Germany so it will be interesting to see if those can catapult iZettle above SumUp, and if Payleven can close the gap with its two in-market peers.
It’s clearly an important market for these firms as evidenced by iZettle CEO Jacob de Geer comments: “Strategically, Germany is one of our core markets, and we are committed to serving everyone from individuals to small businesses here long term…Our ambition is to become the undisputed market leader in Germany.”
March 2, 2014
PayPal Climbs in App Store; Square, Google Wallet and LevelUp Show Little Momentum
Earlier this week, eBay's PayPal app reached its highest overall App Store rank in nearly five months. And at present, it appears startup competitors offering mobile wallets still have a ways to go to top PayPal in the charts.
Until the recent Carl Icahn-inspired push for PayPal’s spin-off from parent company eBay, the big story for PayPal was the reinvention efforts for the company being driven by PayPal unit President David Marcus and his team.
So when we observed a huge jump by eBay’s PayPal app in the iTunes App Store based on our mining of iTunes data, we wanted to take a closer look to see how PayPal has been trending on the mobile front. It’s worth noting that the jump this past week resulted in PayPal reaching its highest overall App Store rank in nearly five months.
Below is a chart of PayPal’s recent trend in the overall App Store rankings:
Given the jump, we wanted to see how PayPal fares against other mobile wallet vendors including private competitors Square and LevelUP as well as public or already-acquired vendors including Google Wallet and LifeLock-acquired Lemon Wallet.
As the red line below shows, PayPal’s app has consistently ranked in the top 5-ranked ‘Finance’ apps. More interestingly, Venmo, a P2P mobile wallet app picked up by PayPal via its $800M acquisition of BrainTree has also trended in the top 20-ranked ‘Finance’ apps.
The performance of several PayPal comparables & competitors has been less favorable or consistent:
Square which is rumored to be postponing its IPO ‘indefinitely’ due to revenue growth and valuation misalignment has seen mixed performance among its two apps. Wallet, which connects users with Square-registered merchants, has fallen in the ‘Lifestyle’ ranking while Cash, its P2P mobile wallet, has trended in the top 100 ‘Finance’ since launch.
Google’s Wallet app has not been able to surpass either Venmo or PayPal’s app in the ‘Finance’ ranking highlighting what seems to be continued floundering in the payments arena by the search giant.
LevelUp, backed by Google Ventures, T-Venture and Highland Capital, which was rumored to be valued at $172 million plus at its last financing in 2012 hasn’t seen much momentum within the App Store as well.
Mobile payment startup Loop debuted its Wallet app in the ‘Lifestyle’ category on Feb. 19th but hasn’t seen any steady momentum in the rankings thus far.
April 10, 2014
Mobile PoS Upstarts Seeing Increased Investment Interest from Giants in Financial Services, Tech, Telecom and Retail
In addition to traditional VCs, mobile point-of-sale startups are seeing investment from the likes of eBay, Mastercard, Starbucks and Verizon to name a few. In other words, the payments landscape continues to get messier.
Mobile PoS startups that enable merchants to conduct transactions and sometimes manage their businesses through mobile devices such as smartphones and tablets have raised $340M across 34 deals in the last 4 quarters. Deal growth at the seed and Series B stages suggests increased competition at the early stage and a healthy follow-on investment market for those with early traction.
Overall, deal activity has remained flat YoY and funding was actually down 7.5% as a result of the Q3 2012 $200m series D financing for Square, led by Citi Ventures, Rizvi Traverse Management, and Starbucks.
Series B Leads Funding Growth
The sector saw series B financings soar 200% YoY with the likes of iZettle, Vend and Flint Mobile getting funded. In the same time period, seed-stage financings grew 80% YoY. The mobile PoS space remains in its early days as evidenced by the fact that 95% of deals are occurring in Series B or prior. Interestingly, when companies get past the Series B, the round sizes step up materially as evidenced by the average and median deal sizes below in the hundreds of millions of dollars.
Corporate Investors Active in Mobile PoS Investing
Over the past two years, a diverse array of corporate investors has been actively investing in mobile PoS companies. Notable corporate investors include Ebay, Starbucks, Verizon Ventures, Citi Ventures, Mastercard, and American Express Ventures. The diversity of the players is notable. While the expected credit card companies and payment networks are represented, there are also telecoms, tech and retail companies all attacking the space. As we’ve highlighted before, the payments landscape is becoming increasingly messy and the mobile PoS investors underscore that.
21% of deals in the last year have involved corporations. Some of the notable mobile PoS deals in which they’ve participated include:
Square (Citi Ventures, Starbucks Corporation) – Facilitates transactions between buyers and sellers with its free credit card reader, while also using Square Register to serve as a full point-of-sale system for businesses.
iZettle (American Express Ventures, Mastercard Worldwide) – Provides a free mobile app and mini chip-card reader that lets anyone make or take payments anytime, anywhere.
SumUp (American Express Ventures) – Provides merchants with a free card reader connected to a mobile device and an app to enter the amount to be transferred.
Flint Mobile (Verizon Ventures) – Develops an app that enables users to process payments using only their phone without any additional card readers or dongles, through patented technology.
May 12, 2014
Square Wallet’s Slow and Steady Demise
Square Wallet's subpar performance became apparent back in March. Since then, the decline only accelerated ultimately forcing Square to pivot and shutter Square Wallet.
Square is among the buzziest names in the mobile payments ecosystem today, backed by more than $340M in venture capital from top-tier investors including Kleiner Perkins, Khosla Ventures and Sequoia Capital. But this week, the well-funded payments company threw in the towel on its mobile payments app Square Wallet – removing the app from both the iTunes App Store and Google Play Store.
While the end of Square Wallet came hand-in-hand with the launch of a new ordering app aimed at local shops, cafes, and restaurants called Square Order, it’s clear based on the data that Square Wallet – which aimed to connect users with Square-registered merchants – was clearly a dud in the mobile ranks.
In the beginning of March, we had already noted that Square Wallet had fallen in its App Store category ranking relative to competitors including PayPal, Google Wallet and even LevelUp. Refreshing the data since then shows that Square’s decline in the App Store ranks has been even more precipitous, falling out of the top 300 ‘Lifestyle’ apps in the past couple weeks.
The chart below highlights Square Wallet’s rapid fall in its category ranking vs. four competing mobile wallet apps. Interestingly, LifeLock Wallet (formerly Lemon Wallet prior to its purchase by Lifelock) also saw a significant drop in the App Store ranks but has bounced back since the beginning of May.
May 21, 2014
Unlike MasterCard & Visa, American Express Looks Far Beyond Payments for Venture Investments
MasterCard and Visa made more than 60% of their investments in payments since 2009. American Express, on the other hand, saw payments take just 27% of its deals.
Visa, MasterCard, and American Express are the largest payment networks in the US (Discover is a distant 4th). As the payments space sees tech innovation ramp up, the three firms have actively taken to st
rategically investing in startups. Over the past four quarters, the three have participated in 14 deals representing $165M in aggregate funding. On a deal basis, the triumvirate has done 27% more deals YoY.
No surprise – Payments investments dominate
Nearly 40% of all deals made over the last five years by AmEx, Visa and MasterCard went to payments tech companies as one might expect. More interesting are investment forays by the payments giants into areas like eCommerce apparel & accessories business intelligence and advertising, sales and marketing tech (more on that below).
American Express goes off the beaten path
When we break down the sub-industry level investments by each company, it is clear that American Express is most heavily investing outside its core payments business. While MasterCard and Visa each made 60% or more of their investments in payments over the period, AmEx’s payments investments accounted for just 27% of their total deals.
Some of American Express’ largest investments have, in fact, been in areas quite removed from payments. In February 2013 AmEx participated in the $41.5M Series B round for custom glasses maker, Warby Parker. Then, in July, they invested in a $53M Series C round for Fancy, a social shopping and blogging platform to list products. Both Warby Parker and Fancy would seem to be aligned with AmEx’s affluent, high value cardmember base, but