Start-ups such as Square but also retailers, internet and tech giants such as Google, Alibaba and Apple are fighting for market share.
Square makes a small device firms can use in conjunction with an app to turn any smartphone into a credit card reader. The firm has received a lot of attention on Wall Street, even from banks whose traditional payment methods it challenges. The group became the latest mobile payments company to secure credit in a deal announced over the weekend.
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In China, internet provider Tencent and online shopping giant Alibaba, which is expected to list in New York later this year with initial valuations reaching as much as $250 billion, both have mobile wallet offerings and incentivize users to pay digitally with free cash credit. The wallets allow users to put money on their phones to spend in-store. Taxi apps, which locate the user and minicabs in the area to offer a quote, have been instrumental in driving growth in mobile payments.
Swiss & Global fund manager Jian Shi Cortesi, who runs a Chinese equity fund, said taxi apps are predominantly being used to educate users how to pay for things using their smartphones.
"We are seeing the daily volumes under these [taxi app] campaigns rising to 700,000 Tencent users a day and 300,000 Alibaba per day. That is a really high number," she told CNBC.
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"Alibaba and Tencent actually give people cash," she added, in an effort to encourage people to adopt the technology.
Square is currently valued at around $5 million, following around $200 million in additional capital it bagged last weekend.
Co-founder and CEO Jack Dorsey is said to be meeting with banks about a potential public offering for Square.