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….
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