Yoyo Wallet: Entering the Mobile Market Payment Space in the United States

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Sewanee University of the South
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Case study
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Every major business knows that the sector to be right now is mobile. There is an ongoing major development of a wide range of new mobile wallet technologies Yoyo Wallet being one of them because the forecast is that mobile money will be the face of many days today payments sooner rather than later. But will Yoyo wallet's mobile's path to widespread acceptance really be that smooth? Although the number of strides Yoyo wallet has made so far considering it is a very new entrant in this market is significant having more than 80,000 users, there are still a number of major key hurdles that this mobile money company need to overcome before it can attain its full potential in such a key markets like the US. CITATION Ric16 \l 1033 (Richard Ivey School of Business Foundation, 2016)POS still lacking maturity

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While Yoyo wallet has made some major progress in technology enabling its users to make in-store payments directly from their device, they still have a long way to go. In particular, the issues that Yoyo wallet still need to addressed include the following:-

-There is still consumer concerns with regards to security

-The fragmentation of the market

-There is still a limited number of merchants who are accepting the technology

For example, so as to overcome the previous worry, Yoyo will have to take a major education effort in order to convince consumers of the security of their tools. They will need to involve the emphasis of roles of tokenization as well as biometrics like the fingerprint scanner being used by Apple Pay in the verification of transactions.

Porters Five Forces

An important framework that will allow this firm to analyze the intensity of the competition hence its attractiveness in the industry is The Porter Five Forces. In this context, Attractiveness will refer to the overall profitability of the industry. I will cover the competitive intensity as well as the overall profitability of the US mobile payment market.

Market segment

The segment of the market that Yoyo wallet is targeting on, being the averse card holders who use social networking sites. My rationale here being an analysis of the level of competition that Yoyo wallet faces in the online platform as well as a determination of the level of attractiveness in Yoyo's targeted segment.

Threat of New Entrants

This market has a minimal threat of new entrants. This is because the first issue that acts as the barrier for a new entrant is customer base together with reputation. At present moment, the US market has got two major and established players in the mobile payment industry constantly targeting the online users. They are Google Wallet, Samsung pay and Apple pay. Being local companies as opposed to Yoyo which is from England, these players have already made major strides in penetration the US market. This is because of their ability to leverage on their stakeholders' existing customer base. Yoyo Wallet needs to focus more on collaborating with major mobile payment companies. So far as a mobile payment provider Yoyo has been able to successfully establish a wider and global reach to its customers all the while as they more easily build up their reputation as a trusted and reliable payment company. In view of this, any new entrant with a desire to enter into the market has no option but to form similar strategic alliances with carrier networks hence create and establish a strong relationship with existing high profile merchants. CITATION Ric16 \l 1033 (Richard Ivey School of Business Foundation, 2016)However, in consideration of the fact that the current players already have a strong presence in the market, newcomers stand to face a significant level of difficulty when it comes to entering the US market. The second major issue acting as a barrier for new entrants is financial. This is because there is a requirement of a relatively significant amount of capital by newcomers or start-ups in building the necessary infrastructure that is to support the payment process, coupled with skilled management team to counter the competition Therefore, because of the high entry barriers, this segment of the industry in view of threat of new entrants is rather low. CITATION BII16 \l 1033 (BI Intelligence, 2016)Bargaining Power of Suppliers

This market segment has a high bargaining power of suppliers. The only supplier in this segment of the industry is the US carrier networks. Yoyo needs to work more on its carrier networks providing it with the necessary infrastructure in communication to be more in touch with its customers. Their business model needs to focus more on building and selling its service. Yoyo needs to overcome such issues such as being charged the card not present costs passed on to their customers. They naturally need a higher bargaining power to be able to reach to a wider group of customers through Yoyos partnership with food services industries they are targeting within higher learning institutions and corporate institutions. CITATION BII16 \l 1033 (BI Intelligence, 2016)Bargaining Power of Buyers

This market segment is comprised of two groups of buyers. The first being users of social networking sites and game portals, in particular, mobile users who do not hold the bank account and card averse. Each time a user uses Yoyo's mobile payment service; there will be a requirement to pay an additional fee as service charge. If Yoyo increases this service surcharge, the possibilities of users opting for other methods of payment such PAYPAL or credit cards increases if they find it cheaper to do so. As such in order to retain its customers, Yoyo will find it necessary to maintain a relatively low service charge. This clearly demonstrates that the customers have a relatively significant bargaining power. CITATION BII161 \l 1033 (BI Intelligence, 2016)2

Intraindustry Rivalry

There is a moderately high intra-industry rivalry in this market segment. In this market, the customers do not have any brand loyalty because in general, they do not care who the provider of the mobile payment service is. As long they are able to do their mobile transactions conveniently at a relatively low cost, they are satisfied. This being so, it is easy for customers to shift to other competitors Google Wallet or Apple pay if they find Yoyo's service not up to their expectations. To stop them from swapping to mobile payment providers, then their networking site has not to be supported by another mobile payment provider forcing the customers to make use of the mobile payment service that is already available to them hence making the intra-industry rivalry moderately high instead of high.

Conclusion based on Key Findings from Porters 5 Forces

As we can see in view of the porter's five forces analysis, the evidence is clear that the current level of competition in both Yoyo's targeted segment, as well as the US mobile payment market, is generally very high deterring new entrants. It is, however, important for us to recognize that Yoyo is facing a significant level and scope of the threat of its present competitors. This is from both the targeted segment together with the overall US mobile payment market. I think that there is a lack of product differentiation and price sensitivity of its consumers, which casts doubts on Yoyo wallets profitability in the long run. At the same time, the stiff competition being faced by Yoyo from the stated bigger and more reputable players in the general mobile payment industry especially given that Yoyo is a new entrant from a foreign country casts doubts on not only its profitability but also its future existence in the market. CITATION BII161 \l 1033 (BI Intelligence, 2016)2

Although Yoyo wallet is currently doing relatively well having a superb marketing strategy especially in targeting the young technologically adept populations, it's been in the US for only a year which, its sustainability and profitability even in the short run still remain questionable. It faces strong competition from its competitors Apple pay, Samsung pay and Google wallet, who are targeting the same group of customers, on the same platform and the same mode of mobile payment service. With the presence of moderately low switching cost as well as customers having a moderately high bargaining power, YOYO has to be consistent in providing a better product/service offerings to its customers so as to retain them. This way they will be able to sustain their ability to remain both profitable and sustainable even in the long run. CITATION Jur13 \l 1033 (Jurevicius, 2013)References

BIBLIOGRAPHY BI Intelligence. (2016, July 28). www.businessinsider.com. Retrieved March 24, 2017, from www.businessinsider.com/apple-pay-is-dominating: www.businessinsider.com/apple-pay-is-dominating-the-mobile-payment-industry-2016-7

BI Intelligence. (2016, June 3). www.businessinsider-the mobile-payments-report-markets.com. Retrieved March 24, 2017, from www.businessinsider.com: www.businessinsider-the mobile-payments-report-markets-consumer-trends-and-thebarreirs.com

Jurevicius, O. (2013, May 27). Porter's Five Forces. Retrieved March 24, 2017, from www.managementinsight.com: www.managementinsight.com/tools/portes-five-forces.html

Richard Ivey School of Business Foundation. (2016). Mobile money in the US. YOYO WALLET: ENTERING THE MOBILE PAYMENT IN THE UNITED STATES.

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