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Still, Pay Pal has done extremely well for itself and the credit card companies would much prefer to not have watched from the sidelines, but developed a similar system of their own a decade ago.

The next big thing now is the evolution of mobile payments.

According to Galante and Eichenbaum, the three market leaders “have spent nearly $3 billion to buy Net-based payment processors.” Smaller rival Discover, for its part, has teamed up with telecoms AT&T, T-Mobile and Verizon and British bank Barklays to create a national mobile commerce network, perhaps the biggest ongoing m-commerce project.

It’s too early to predict how the m-payment drama will play itself out, but it seems likely that this time there will not be an unqualified winner, the Pay Pal of mobile payments.

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More than half of these fees is actually collected by the credit card issuer.

For example, for a payment made with a Visa Rewards card, the card issuer will collect 1.95 percent of the transaction amount plus $0.10.

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