Blockchain, bitcoin and other cyber currencies have finally entered the mainstream and Wall Street is buzzing about FinTech companies poised to capitalize on this trend. This is not surprising considering the pace of innovation and growth this industry has experienced recently. In this article, we focus specifically on the exciting bitcoin mobile payments sub-sector of the FinTech marketplace and why we feel investors will continue to witness explosive growth in this space for years to come.
Ever since PayPal (widely considered the dawn of alternative payment processing) the pace of innovation and user adoption in the mobile payment processing space has, and continues to grow exponentially. PayPal’s growth in the mobile payments sub-sector of its own business has increased 55% to $100 billion last year alone. Investors both large and small are starting to take notice and so should you.
According to Business Insider, US mobile payment transaction volume will reach $75 billion this year. Between 2016-2020, they expect volume to rise by a compound annual growth rate of 80% to bring mobile payments volume to an impressive $503 billion by 2020. Such rapid change in consumer spending methods understandably have major financial institutions nervous. According to a report by PWC, more than 80% of incumbent financial institutions believe they are increasingly likely to lose revenue to innovators and disruptors entering the FinTech space and capitalizing on the growth of blockchain technologies and cyber currencies like bitcoin. Of these, 82% expect to increase FinTech partnerships in the next three to five years in order to keep up to this fast pace of innovation and 77% of financial institutions expect to adopt blockchain as part of an in-production system or process by 2020.
Financial institutions already see the need to invest in FinTech projects using blockchain and bitcoin as they watch their customers demand, and navigate away to more user-friendly ways to transact their online and offline goods and services purchases. It is also widely known that incumbents in the financial services market although powerful are very resistant to change, stuck with antiquated back office technologies not easily replaced. We therefore believe the real opportunities are to be found among nimble startup companies that bring something unique to this ever-growing space. FinTech blockchain focused startups are innovative, daring, and increasingly successful. They are thriving, and they represent the future of finance.
The companies capitalizing on the monstrous growth in this space have found methods to simplify the transaction process, increasing convenience for the payer and the payee while adding additional security and compliance to minimize the risk of fraud. Paypal accomplished this by simplifying online checkouts through their online wallet system and easy checkout process. The same trend of simplification has paid off big for mobile payment company Square (NYSE:SQ) who is now valued at over $9 billion.
Their innovative technology allows businesses to accept swiped card transactions from tablets and phones eliminating the need for an expensive mobile payment processing terminal. Square’s innovation extended the reach of payments through mobile phones, but this innovation still requires the Square device to be attached to a phone or tablet. With over 75% of Americans now owning a smartphone and over 44% of the global population, we feel the next logical step will be an innovative technology that enables payment processing solely through a smartphone application.
One such company is Social Pay USA (OTC:SPLY) and their mobile payments startup Spot and Pay Inc.
Spot and Pay is a universal payment platform, leveraging patent pending mobile payment technology to solve this problem. Spot and Pay utilizes a unique QR code technology that turns any mobile phone into a payment processing terminal and electronic wallet in just minutes simplifying payments for both the payer and merchant including a currency agnostic blockchain platform.
Spot and Pay boasts a 5 second checkout and its innovative crypto currency friendly checkout solution can be universally adapted to any payment scenario including restaurant and retail POS systems and online payments. Additionally, the flexible software architecture has been designed to give the company flexibility to adapt new or complementary interfaces as there is customer demand such as NFC or RFID scanning technologies.
Allied Market Research estimates that by 2022 the global mobile payments market will have rocketed to over $3 Trillion per year growing at over 33% a year between now and then. Additional growth with wider adoption of crypto currencies and blockchain technologies is also expected to spur growth with an expected 10 times market increase from 2016 to 2021.
Obviously with such a large market there are many players rushing to this space, however we feel that Social Play USA’s (OTC:SPLY) marketing strategy may pay off establishing them as a viable buyout candidate or even a potential long term contender. Social Play USA (OTC:SPLY) has identified several niche market spaces in need of their specific mobile payments solution which will also help the company capture a large number of new users pushing additional user adoption and merchant demand to their mobile payments application.
In particular, we’re most excited about their focus on charitable giving and donations. While this is not the largest market segment, it still represents $350 billion per year. But even more critical is the number of potential adopters this market represents to the companies mobile payments application. According to a Gallop poll, 83% of Americans donate each year. Donation opportunities are often spontaneous and by their nature mobile. Everything from giving during weekly religious gatherings to helping the local sports team raise money to fire fighters collecting money in cans in the street, to the salvation army bells and red buckets at Christmas all have that in common. But as we move more quickly into a cashless society, replacing the speed and ease of making a quick cash gift with something tied to the smart phones in almost all our pockets is critical for organizations to maintain their donor base and contribution levels.
If you can now picture sitting in Sunday church and rather than the envelopes and baskets getting passed around, when its time for giving church goers merely scan the QR code on the back of the weekly program, enter an amount and confirm the payment. The payment is then securely deposited into the Church’s account the same way a traditional credit card transaction is completed but without taking the time and without any interfacing technology required from the Church. Countless other applications of this can be considered and due to the obvious advantage of not requiring a technical counterpart the way that applications like Apple or Android pay do, Spot and Pay’s technology is well suited to dominate the giving and donation space and provides the company with a clear path to new user adoption in order to establish itself as an alternative to other competing technologies.
Currently, other mobile solutions are having difficulty gaining adoption with the leaders at only about 5% adoption. With just modest market adoption within the giving and donation space, Spot and Pay could well establish itself and even become a contender with sufficient user adoption and due to the lack of integration QR codes offer over other mobile payment options along with the lack of technology interface from the merchant, Spot and Pay is well positioned to become a disruptive startup.
Although we touched on the significant advantage Spot and Pay has over some of the competing mobile technologies, below is a more detailed comparison of Spot and Pay’s mobile payment’s technology vs Apple Pay, Android Pay, and Samsung Pay.
Revisiting recent FinTech disrupter Square’s meteoric rise, we feel Spot and Pay has a lot of similarities.
Square introduced a patented disruptive mobile payments technology allowing the processing of credit card transactions using an inexpensive card reader that attached to tablets or phones. This meant that a pizza delivery person would be able to collect a credit card transaction on location when the food was dropped off decreasing credit card fraud risk to the restaurant and reducing the time to make a payment.
Social Play USA (OTC:SPLY) has introduced a disruptive mobile payments technology that has had a provisional patent issued which allows any smartphone user to make a payment to any merchant even when the merchant doesn’t have any technology present to accept a payment. Now that same pizza delivery person can accept a payment from a customer just by having the customer scan the pizza company’s Spot and Pay QR code. There is no technology required by the delivery person and the transaction time has been reduced to just 6 seconds.
What this means is that even if Social Play USA (OTC:SPLY) fell wildly short of Square and was only able to capture $1 Billion a year in processing volumes from the charitable giving and donations markets at similar fundamentals to Square’s and assuming a similar valuation ratio, this would put Social Play USA’s market cap at approximately $700 million, or almost 100 times what it sits at today.
Most investors look back on what we could have made if we had just bought the right stock and gotten in early, but fortunately for you, today you have the opportunity to look forward and actually get in at the ground floor.
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