Disentangling Digital Platform Competition: The Case of UK Mobile Payment Platforms

Abstract

Digital platforms confer competitive advantage through superior architectural configurations. There is, however, still a dearth of research that sheds light on the competitive attributes that define platform competition from an architectural standpoint. To disentangle platform competition, we opted for the mobile payment market in the United Kingdom as our empirical setting. By conceptualizing digital platforms as layered modular architectures and embracing the theoretical lens of strategic groups, this study supplements prior research by deriving a taxonomy of platform profiles that is grounded on the strategic dimensions of value creation and value delivery architectures. We discover that mobile payment platforms could be delineated based on: (1) whether they are integrative or integratable on their value creation architecture; and (2) whether they have direct, indirect, or open access on their value delivery architecture. The preceding attributes of value creation architecture and value delivery architecture aided us in identifying six profiles associated with mobile payment platforms, which in turn led us to advance three competitive strategies that could be pursued by digital platforms in network economies.

Key words and phrases:

• digital infrastructures
• digital platforms
• financial technologies
• mobile payments
• network economies
• online competition
• strategic groups

Notes

1. We employ the term “platform derivatives” to describe technological by-products of digital platforms that are constructed on the basis of developmental tools (e.g., application programming interfaces [APIs] or software development kits [SDKs]) supplied by these platforms.

2. Faster Payments Service (FPS) is a UK banking initiative to reduce payment times between customer bank accounts from three working days via the long-established BACS system, to typically a few hours.

3. API keys are authentication codes that must be incorporated into third-party applications to gain access to the developmental tools (i.e., APIs) offered by Droplet.

4. Bankers’ Automated Clearing Services (BACS) is the payment infrastructure for the clearing and settlement of automated payment methods in the UK such as direct debit.

Additional information

Notes on contributors

Erol Kazan

Erol Kazan ([email protected]; corresponding author) is a Ph.D. candidate in the Department of Digitalization, Copenhagen Business School, Denmark. His research focuses on digital platforms and financial technology in the area of cryptocurrencies and blockchain. His work has been presented at numerous international conferences and published in Communications of the Association for Information Systems and Journal of Theoretical and Applied Electronic Commerce Research.

Chee-Wee Tan

Chee-Wee Tan ([email protected]) is a professor in the Department of Digitalization at Copenhagen Business School. His research interests center on design and innovation related to the delivery of digital services in various contexts such as e-commerce, e-government, e-health, and m-commerce. His work has been published in MIS Quarterly, Information Systems Research, and European Journal of Information Systems, among others. He serves as an associate editor for MIS Quarterly, Internet Research, and Journal of Management Analytics as well as on the Editorial Board of IEEE Transactions on Engineering Management.

Eric T.K. Lim

Eric T.K. Lim ([email protected]) is a tenured senior lecturer in the School of Information Systems & Technology Management at UNSW Business School, UNSW Sydney. He investigates how technologically enabled open innovations in crowd platforms and social media can be harnessed to benefit society. His research has been published in Information Systems Research, Journal of the American Society for Information Science and Technology, and European Journal of Information Systems, among others. He serves as an associate editor for Internet Research.

Carsten Sørensen

Carsten Sørensen ([email protected]) is an associate professor (reader) in digital innovation in Department of Management at the London School of Economics and Political Science. He has researched digital innovation and the innovation dynamics of mobile infrastructures and platforms. He has published in MIS Quarterly, Information Systems Research, Information Systems Journal, Journal of Information Technology, Information and Organization, among others. He has been engaged in assisting and assessing digital startups, and in academic consultancy and executive education with a broad range of organizations, including the International Monetary Fund, Microsoft, Google, PA Consulting, Orange, Vodafone, Intel, and GEMS.

Jan Damsgaard

Jan Damsgaard ([email protected]) is head of the Department of Digitalization, Copenhagen Business School. He holds a Ph.D. in information systems. His research focuses on digitalization and disruption, and in particular on the diffusion and implementation of networked technologies such as payment services, social media, and platform services. His work combines business and technological perspectives, often applied to finance, information technology, and the transportation sector. He has worked and done research at numerous institutions in Denmark, the United States, China, Finland, and Australia.