Disruptive innovation in the Swedish payment market: A supply-side perspective

University essay from KTH/Industriell Management

Abstract: For the last decades there has been a steady shift from cash to card payments and with increased smart phone penetration, payments have started to move into our mobile devices. This thesis studies how mobile payments can change the traditional payment landscape. The purpose is to assess the disruptiveness of the Swedish mobile payment market and describe key stakeholder strategies for managing a potentially disruptive change. The study has been designed as a combination of a theoretical and an empirical study where the theoretical part consisted of a literature review that hinted on a gap in terms of available literature on the disruptiveness of different mobile payment business models. Main theoretical concepts used are; disruptive innovation, business model innovation, and theories on competing solutions and dominant design. The subsequent empirical study consisted of a number of qualitative, indepth interviews with key stakeholder from the Swedish mobile payment industry: five mobile payment providers, one major merchant, and the Swedish Trade Federation. This thesis shows that two fundamentally different types of mobile C2B payments are emerging; mobile payment solutions based on existing card payment schemes and mobile payment solutions that build on new and independent payment schemes. The independent model has been defined as the most powerful disruptive force in relation to the existing market for card payments, mainly because it offers opportunities for innovative players to build simple new payment schemes that bypass traditional card payment players and therefore can be made far more cost efficient. However, many established card payment players are inhibiting this development since they are afraid it could seriously harm their existing card business.

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