Competition, Cooperation and Regulation: Understanding the Evolution of the Mobile Payments Technology Ecosystem

Abstract

The past twenty years have been a time of many new technological developments, changing business practices, and interesting innovations in the financial information system (IS) and technology landscape. They have led to the increasing use of prior innovations that have supported e-commerce, and that are now being brought into financial services to support different kinds of improvements to core business processes. This research examines recent changes in the payment sector in financial services, specifically related to mobile payments (m-payments) that enable new channels for consumer payments for goods and services purchases, and other forms of economic exchange. We extend recent research on technology ecosystems and paths of influence analysis for how industry-centered technology innovations arise and evolve. We explore the extent to which they can be understood through the lens of several simple building blocks, including technology components, technology-based services, and the technology-supported infrastructures that provide foundations for the related digital businesses. Our extension of the prior research focuses on two key elements: (1) modeling the impacts of competition and cooperation on different forms of innovations in the aforementioned building blocks; and (2) representing the role that regulatory forces play in driving or delaying innovation in the larger scope of our modeling approach. To assess the efficacy of our approach, we use it to retrospectively analyze the past two decades of innovations in the m-payments space. Our results identify the industry-specific patterns of innovation that have occurred, suggest how they have been affected by competition, cooperation and regulation, and point out some more universal patterns of technology innovations that offer insights into the development of e-commerce.

Keywords: Competition, cooperation, e-commerce, financial services, mobile payments, paths of influence, regulation, technology evolution, technology ecosystems