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?

Samsung Pay

The Mobile World Congress in Barcelona this year has been a week full of announcements regarding mobile payment solutions of two major tech giants. As expected Samsung and Google announced the counterpart of Apple´s Mobile Payment solution Apple Pay.

 

Samsung Pay

Samsung Pay acts and looks like Apple Pay but we also can see major differences.

First of all Samsung Pay is only available for the latest Samsung smartphones, Galaxy S6 and Edge. Apple Pay instead is only available on the iPhone 6 and the iPhone 6 Plus.

One huge difference is also that Samsung is not charging any fees for a mobile payment transaction, Apple instead gets 0, 15% per transaction.

 

Technology & Security

From a technology perspective Samsung is also using an embedded secure element, which will be delivered by Oberthur a French mobile security specialist.

The secure element will be used to securely store your payment card information and your one time tokens on your mobile device. In addition to that the certified tokenization technology which will be provisioned by major schemes like Master Card, Visa and American Express should guarantee a secure payment transaction at the Point of Sale.

Both solutions also use fingerprint scanning as an authentication factor at the Point of Sale to ensure the authenticity of the customer.

One of the major differences between those two systems is the transmission standard. In contrast to Apple (NFC), Samsung is also using Barcode and another technology called Magnetic Secure Transmission (MST).

Through the acquisition of Loop Pay a mobile payment solution provider, Samsung is able to process a payment transaction at the Point of Sale without a NFC enabled terminal.

So what is MST? MST technology generates changing magnetic fields over a very short period of time. This is accomplished by putting alternating current through an inductive loop, which can then be received by the magnetic read head of the credit card reader. The signal received from the device emulates the same magnetic field change as a mag stripe card when swiped across the same read head. Loop Pay´s technology works within a 3-inch distance from the read head. The field dissipates rapidly beyond that point, and only exists during a transmission initiated by the user.

MST seems to be a good alternative for NFC but as most of the Financial Institutions and Payment Schemes globally are migrating from Magstripe to contactless EMV chip cards MST could become a great USP for Samsung at the short-term, whereas NFC contactless transaction could be a long-term solution for mobile payments as more and more terminals are going to be contactless. But right now MST is a great alternative for the US market entry as a lot of POS terminals in the United States are still not contactless.

 

User Experience

Both solutions fulfill two main criteria’s of being fast and easy at the same time.

It seems that you first have to activate your Galaxy S6/Edge, choose your preferred payment card, and finally authenticate by using the fingerprint sensor to activate your mobile payment functionality. With Apple Pay, you tap your phone at the POS terminal and scan your finger, even if the phone is locked.

As Apple Pay, Samsung Pay will be pre-installed on Samsung Galaxy S6 handsets so everyone can use this new feature immediately.

Roll out process

You can simply add a new card of participating banks by simply scanning the card with your handset camera and simply adding some additional payment card information. Samsung is not having a system like iTunes in which much of the payment card information of Apple customers are already stored.

In addition to that Samsung Pay will be rolled out this summer in the US and South Korea but further expansions are planned.

In-App Payments

Unlike Apple, Samsung is not supporting In-App purchases right now like Apple is doing. Integrating this feature into their systems Apple is having a great USP and a huge advantage over other players.

 

Conclusion:

With over 20% market share Samsung has got a huge potential customer base for their mobile payment solution. Until now it is not guaranteed that this solution will be the only solution Samsung clients will use to pay with their smartphones, we also can see further movement in the Android market beside Samsung, also Financial Institutions, and especially Google is catching up to place their on solution in the market or to improve existing services, at which we will take a closer look in the next article.

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….

Rabobank launches Rabo Wallet

Rabobank expanded their mobile banking offering with a completely new payment service. The Dutch financial institution is one of the first institutions in Europe which commercially launched an independent mobile payment service for their customers. 12 years after they have launched their first mobile banking service, to transfer money, and check balances via a smartphone, they now launched an additional payment service beside cash, physical debit – and credit cards, to pay convenient with a smartphone in stores by simply tapping their handset on an NFC enabled Point of Sale (POS) terminal.

All Rabobank customers over 18 are able to pay in stores contactless with their smartphone up to an amount of 25€ without entering a mobile PIN. For every amount that excels 25€ you will have to enter your mobile PIN at the POS. Prerequisite for using the Rabo Wallet is to have a Samsung Galaxy S4 or Samsung Galaxy Note. To use the mobile payment service you don’t need access to the internet while you are triggering the payment process at the POS. Furthermore you also don´t have to pay any additional fees. Right now Rabo Wallet is only available for these mentioned Samsung devices and not for Apple iPhones. To use the Rabo Wallet you simply have to download the Wallet free of charge from the Google Play store and add your payment card to the app. Unfortunately T-Mobile blocked the download of the Rabo Wallet for T-Mobile customers, which shows that also Mobile Network Operators are trying to offer their own independent mobile payment solution.

In cooperation with Samsung and Giesecke & Devrient (G&D) Rabobank is ensuring a secure payment transaction at the Point of Sale. Samsung provides an embedded secure element on their handsets to securely store your payment information on the mobile device and retrieve them if necessary. G&D´s Trusted Service Manager (TSM) hub will be used to securely manage the whole lifecycle of mobile payment cards.

Additionally G&D is also providing their Convego AppWorld solution; enabling Rabobank to set up further services via remote G&D managed service.

Another great add on which makes the Rabo Wallet much more interesting for their clients is MyOrder. Rabobank acquired MyOrder in 2012, which enables customers to use their app to place orders at shops, restaurants, car park ticket machines, and also to add loyalty card.

In general Rabobank and their partners created a simple and appealing user experience throughout the whole mobile payment application. As it is one of the first commercially launched mobile payment solution in Europe it will be interesting to watch how customers will accept the solution and how seamless the payment process will work.

Check out the Rabo Wallet videos to see how easy it works.

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.

Mobile Payments Today

This is the first article of PayUx and honestly start writing an article or academic text is always the most difficult part. But for the first article it makes sense to look at the current situation of mobile payments.

Mobile payment………seems to be a very ambivalent term. What do we mean if we talk about mobile payments? The term “mobile” is any kind of activity that we do while we are on the go with smart devices like smartphones or smart watches. Pre requisite for being mobile nowadays is to be connected to the internet and to be able to communicate with other people or other devices via mobile networks or technologies like Near Field Communication (NFC), QR-Codes or Bluetooth.

With mobile payments I associate all kind of payments that I can do with my smart devices while I´m on the go. Doing my bank businesses like paying my bills or doing other money transfers with my mobile banking application is also a part of mobile payment as well as mobile proximity/contactless payment on the Point of Sales in different shops.  Also a part is paying for goods and services which I buy on the internet or with my mobile application of my favorite label or retail store. As you can see mobile payments contains a lot more than just paying with my smart phone contactless.

Most of the above mentioned mobile payment methods are already in place and work. But here we also have to distinguish between different regions and countries worldwide we see according to the “MasterCard mobile payment readiness index” many high developed countries which are ready to do mobile payments in terms of infrastructure, legal questions, and customer acceptance like Canada, Australia or the United States of America. These countries are definitely very innovative and high developed but as usually not every market is equal and can be served the same way as the others. Germany for instance still need some time especially to realize mobile proximity/contactless payments.

Up to date every player in the market like Mobile Network Operators (T-Mobile, Verizon, O2 etc.), Financial Institutions (CommBank Australia, Bank of America or Deutsche Bank etc.), Payment Schemes (MasterCard, Visa, AMEX etc.), Retailers, Technology Giants or even Start Up´s  are trying to get a part of the mobile payment cake.  Every single player mentioned above wants to create their own Unique Selling Proposition and address their own products to their customers. Thereby these players are also looking for cooperation’s to bring their products to the right customer group. All these players above and consortiums of them have already tried to create solutions and standards for the crucial and missing piece ….mobile proximity/contactless payment ….. but most of them failed.

The participation of Apple, the technology giant from Cupertino (California) has triggered compared to the other market players a huge Tsunami. With the launch of the iPhone6 and the integrated NFC Chip and the secure element Apple started to set the course for their mobile payment market entry. As you can assume, if Apple the biggest brand in the world starts to participate in a certain market everyone is going to follow them and to take action. Right now Apple Pay is the answer to all approaches of Financial Institutions and Mobile Network Operators for all iOS devices with an integrated NFC-Chip (up to now only iPhone 6 and iPhone 6 Plus). As Apple Pay is such a massive market changer we will look more detailed into this payment system in a further article.

With Apple Pay they set a high standard in the user experience, simplicity and also the security (privacy) of a mobile payment solution. This standard is now an indication and also a call for action for other market players.

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Conclusion:

In general mobile payment has a huge market potential and is a very interesting market for different players. In the past view year’s different market participants have already created various and very promising solutions for any kind of mobile payments. But with the launch of Apple Pay and the decision to integrate NFC into the iPhone Apple has brought a lot of good movements into the market. In my opinion we will see a lot of new solutions in different countries for any kind of mobile devices in the next view years. The mobile payment market is just in a very early stage and there is a lot more to come.