• Apps like OpenTable, Uber, Seamless, and Dash blur the line between mobile commerce and brick-and-mortar payments. They allow users to order and pay for physical-world services entirely within an app. A user makes smartphone payments without any interaction with a payment terminal, making the experience similar to pure mobile commerce (e.g., ordering something on Amazon through your phone). 
  • Restaurants and bars are uniquely suited to accept payments from these "phone-only" payment apps. Unlike Apple's Apple Pay system, which relies on supplementary technology (NFC) on the merchant side, these apps disintermediate the entire payment terminal. Consumers spend less time waiting for servers and bartenders because they can pay through their phone, while merchants provide service that is more efficient at a lower cost.
  • Uber and Seamless are good examples of the disruptive potential of phone-only mobile commerce apps used to pay for services. Uber and Seamless have been so successful because they dramatically simplify how people order and pay for cabs and food — entirely within an app.
  • While still nascent, we think mobile commerce will also eventually be used beyond the service industry and be adopted in certain retail environments. For example, some small businesses might one day accept payments from the Uber app for in-store purchases. However, in large retail stores app-mediated payments might not work, because it will be difficult in high-volume settings to determine whether specific customers have made their payment or not. 
  • We think mobile-commerce apps are going to shake up the entire payments industry. These apps pose the biggest near-term threat to legacy processors that help businesses accept credit card payments, and if they gain mass adoption they could eventually replace legacy payment terminals in restaurants as well. The US restaurant industry's food and drink sales are projected to reach $683 billion in 2014 (as a point of reference, 37% of US retail establishments are restaurants and bars).

What Is A "Phone-Only" Payments App?

US In Store Mobile PaymentsBIIDespite years of mobile-payments hype, people still aren't using their phones to make payments in stores. Just [...]