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.

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.