Android Pay

We have already talked about Samsung Pay as a new mobile payment solution for Android devices and now we take a closer look into Android Pay.

Android Pay is Googles latest solution and it is indeed not a direct competitor to Samsung Pay and Apple Pay, as it is an Application Programming Interface (API) which allows android app developers to create a payment platform for their own apps. Android Pay will allow contactless transactions at the POS by using Host Card Emulation (HCE). Additionally Android Pay is also supporting In-App payment with Google Checkout. This basically means that companies who run an Android Application and are interested in supporting mobile payments can simply add an Android Pay API layer to integrate In-App or In-Store contactless payments. Sundar Pichai, one of Google´s top executives also mentioned that Android Pay might accommodate support for biometrics as well.

 

But mentioning Google we also have to talk about the Google Wallet. Google Wallet was the first mobile payment approach of Google launched in 2011. It already used NFC as transmission standard but due to low acceptance rates, a small partner network, and the missing contactless infrastructure Google Wallet was not able to achieve main stream adoption.

Four years later, the market seems to be ready for mobile payments and also Google has improved their wallet over the years. Additionally the acquisition of Softcard former ISIS, which is a consortium of the biggest mobile network operators in the United States consisting of AT&T, Verizon, and T-Mobile, gives Google the opportunity to integrate the Softcard solution in their existing portfolio. Additionally the deal can be a strategic move to compete against Samsung Pay as these mentioned mobile network operators could possibly pre-install the Google Wallet on each individual NFC enabled handset (https://support.google.com/wallet/answer/1347934?hl=en). With Google Wallet you also have the ability to pay your friends via your Google Mail account or even split amounts and pay them to friends.

 

If we look at the user experience we can see slightly differences between Google Wallet, Apple Pay, and Samsung Pay. Like Samsung Pay you also have to wake up your Android device to make a contactless transaction at the POS, with Apple Pay in contrast you don´t have to unlock your smartphone. You can also simple add a Debit/Credit Card of participating banks or a Google prepaid card in your Google web account. Google Wallet is also available for iOS users, but we can see one huge restriction; Compared to the Android version you are not able to make contactless payment at the POS.

 

Google´s benefit

Due to the huge data pool of Google, they are able to track your behavior and send specific offers and offer loyalty programs related to your needs. But if you as a consumer feel uncomfortable with this feature you are also able to simply disable the service.

 

So how does Android Pay differ from Apple Pay and Samsung Pay?

Apple Pay and Samsung Pay seem similar in nature. But the API layer, which is more like a platform and not a product like the other two, allows Google to integrate their solution in third party apps. Therefore Google is able to integrate their solution in much more NFC enabled Android devices than Samsung Pay. This gives Android Pay the opportunity to reach a far greater number of users than Apple Pay or Samsung Pay.

Conclusion

Given the facts above, Google has the ability to make a mark in the mobile payment market. But it will be interesting to watch how Google will improve their Wallet and how they expand their partner network globally and not only in the US to offer mobile payments for consumers of different countries. With Android Pay they are able provide banks and merchants with a payment platform to integrate mobile payments in their existing or new banking applications. But will banks worldwide be willing to let Google and Apple take part in their payment ecosystem or not?

Tech Giant´s and Mobile Payment

Samsung Pay, Android Pay

After few years of rumors the mobile payment market seems to get finally in a very decisive phase. Apple has been the first of those three companies, which introduced a mobile payment system called Apple Pay. Since the Apple Keynote in September 2014 it just took a few months until also Samsung and Google announced at the Mobile World Congress this year that they will launch their own payment systems. Even if the Google solution, called Android Pay will be just an Application Programming Interface to support all Android payment applications to add In-App or In-Store payment functionalities. Nevertheless Google has already designed a Graphical User Interface called Google Wallet and improved it steadily since the first launch in 2011. Samsung instead unveiled a similar solution to Apple Pay even if it just supports In-Store mobile payments with NFC and also MST. The mobile payment market seems to be divided into three big pieces. Apple will cover approximately 17% of the IOS market and Samsung and Google will battle for the Android market share with approximately 78%. But what does it mean for other marketers like Financial Institutions, Mobile Network Operators or Retailers?

These players of course still try to place their own independent solutions in the market to not lose a strategic market to one of those three market giants. In general we can see a trend that nobody can deny; tech giants like Apple and Google continuously try to enter completely new markets to inherit a strategic role in a hyperconnected world in which devices can communicate with each other and all kind of smart devices getting more and more important.

One fact to argue against the tech giants is that nearly every consumer nowadays prefers Financial Institutions, Payment Schemes, Mobile Network Operators, and Payment solution provider over Handset manufacturers and Google. But which applications would you use if Passbook, Samsung Pay and Google Wallet are pre-installed on your device, accepted at nearly every store you shop, and if you have several payment cards from different issuers which you can simply add to your payment application?

I would definitely prefer a payment system which is able to add & manage all payment cards I use and which is additionally connected to different retail applications and of course which is simply and secure at the same time. And if also all my issuing banks and payment schemes are participating in a payment system of Apple or Google I would assume that these systems ensure a secure transaction for any kind of mobile payments.

Of course most of the people nowadays still pay with cash and payment cards and plastic will not disappear overnight but the trend is also showing a huge increase in online and mobile transactions, whether In-App payments or online payments the mobile channel is gaining more and more popularity.

Another benefit of Apple and also Samsung is the simple utilization of their systems. Normally adding a new card is extremely easy and don´t take much time and you don’t need many steps to activate the payment process. Furthermore you are also able to simply make online payments and In-App payments with these payment systems. So far those solutions sound like the perfect trial to perform mobile payment transactions at a POS and in addition to that also on the mobile channel.

But will those systems also expand as we expect? Right now only the US market seems to be the best starting point for a market entry, although also other countries will follow in the next month. Tech giants also have to consider legal aspects, payment infrastructures, and have to distinguish between different consumer behaviors which vary from region to region. It definitely will take time until the whole globe is ready to pay without cash and physical cards.

 

Conclusion

Most activities we can see nowadays in the mobile payment industry have been initiated by Apple, Google and payment schemes whether it’s Apple Pay and its clear statement to use NFC and an embedded secure element, Google´s HCE which has been introduced to allow software based payment systems or Tokenization introduced by payment schemes which is a method that replaces the Primary Account Number (PAN) by a token to ensure a secure data transfer of your payment card information. With these statements they always set a clear direction which technology to use.

We can see indeed a huge competition between those three giants but they have one thing in common, they want to create the next level of service for their users and therefore they continuously try to expand their portfolio and enter new markets. This strategy makes it difficult for companies which operated in the payment industry for ages. With Android Pay as a payment platform for In-App and In-Store payments, Google wants to make mobile payment available for everyone who wants to integrate it into their Android solutions. With their power and feigned openness Apple and Google let nearly everyone participate in their systems. But if you pay with your smartphone you always have to keep in mind you will pay with Google or Apple and not with brands you have used to pay in the past….

Rabo Wallet App Tour

Apple Pay

Apple Pay Fact´s

Apple Pay is Apple’s new mobile payment service, which lets iPhone 6, 6 Plus, iPad Air 2, mini3 , and Apple Watch owners make payments with their mobile devices. It has been commercially  launched in the US in October 2014.

• NFC
• Touch ID for Security
• Use of an embedded secure element
• “Tokenization” for secure transactions
• Accepted at 200,000 Locations in U.S., Visa, MasterCard, AMEX and all major US Banks are participating
• Supported by iPhone 6, 6 Plus, Apple Watch, I Pad Air 2, mini3

 

Figures

• 1 Million debit and credit card registrations within the first 72 hours
• Supports Cards that represents some 90% of the credit card purchase volume in the US
• Wells Fargo is paying 20$ to people to sign up for Apple Pay

 

In the first article „Mobile Payments Today“ I refered to the different mobile payment types and the mobile payment market in general. At the end of the article I wrote some words about the new payment system of Apple called Apple Pay.

This  article will look more into what Apple Pay is and how Apple Pay works.

Tim Cook started the Apple Pay Keynote segment in September with the following words: “Our Vision is to replace the “physical” wallet……and we are going to start by focusing on payments”. He also said that Apple Pay will “forever change the way all of us buy things”. In this keynote he outlined and focused on the user experience, simplicity, and security of Apple´s latest service.

 

But what it is? And why is Apple offering a new payment system that Financial Institutions, Payment Schemes or companies like PayPal could offer?

There are several arguments why Apple is taking the lead in this area. First of all Apple is one of the pioneers in the area of smartphones and tablet computers.  Together with Google´s Android operating system, they are without a doubt the market leader in this business. Furthermore they also have a huge app store which they can use to deploy new services within a very short time. And last but not least they have iTunes. More than 800 million users worldwide have stored their credit or debit card data in iTunes and all of these users can be now used to process payments with Apple Pay.  And we also should not forget that Apple is the most valuable brand in the world cashing in on its charisma.

 

All these arguments mentioned have been a good starting point to develop Apple Pay. With their charisma and market power Apple also convinced Financial Institutions, Payment Schemes and Retailers to participate in their approach. With this huge success more than 200.000 participating US Retailers, all major US Banks, and all three Payment Schemes are supporting Apple Pay. Right now Apple Pay is only available in the US but more countries will follow in 2015.

Features

Apple counts on NFC as the transmission standard to communicate with Point of Sale terminals. To ensure a secure transaction a Tokenization service offered by Visa and MasterCard is used to encrypt the payment credentials. These credentials will be stored on the embedded secure element which is physically located in the mobile device.

Currently to authenticate at a store we are using our signature or our PIN code. With Apple Pay we just need the Fingerprint TouchID sensor for the authentication process at the Point of Sale.

There are three different methodologies to use Apple Pay. One option is to pay in store contactless, the other two options are online and in app payments. For all three options, you will have to authenticate with TouchID.

You are also able to set your shipping and billing address as default, this will help you to automatically fill in your shipping or billing address if needed.

With the lost or stolen function you can also use with iCloud you are able to block your payment cards in case you lose your mobile device.

Set Up

The first card you load into Apple Pay is your default card; you can either simply scan a debit or credit card or use the existing ones in iTunes.  Due to security reasons, Apple will not store your credit or debit card numbers on the device. Instead, Apple is generating a specific number which will be stored in the secure element.

After the set up, you are able to see your cards in the Passbook App with all the other loyalty cards you have already added.

Conclusion

In my opinion Apple made a clear statement to rely on NFC as transmission standard in the first place. Furthermore they created an outstanding user experience and combined the needs of customers, financial institutions and retailers. They all can take an advantage of this payment “revolution”.

With this launch, Apple also showed  great creativity and they also underlined their ability to create an outstanding user experience for their customers.

It will be interesting to watch the reaction of other market participants like Samsung, Google, Banks and, mobile network operators.