Tech companies and their entry into the world of mobile payments: an introduction and examination of the players


The volume of mobile payments has exploded over the past few years, with more consumers having access to mobile payment services, more retailers connected to mobile payment platforms and more payment service providers offering the tools necessary to make it all happen.

As with many hot and exciting new technologies in the world of mobile communication, the usual suspects to keep an eye on when it comes to mobile payments are Apple, Samsung and Google. The smartphone giants currently share the playing field with established names in the payment industry such as MasterCard, Visa and PayPal.

Apple launched Apple Pay in the US in 2014, its UK release followed in July 2015 and expansion into continental Europe is coming up. Google has been around for a while with the Google Wallet, which will soon be complemented by Android Pay. Samsung Pay will be released in the US during the fall and later in Europe. So who will win the next big battle? I will analyze the leading players below, pointing out their strengths and their primary weakness.

Apple Pay

apple

As with any of Apple’s big announcements, Apple Pay was received with much enthusiasm and would once again unleash a revolution. It was released almost a year ago, which means it is the only of the big three that has currently released its mobile payment platform. Apple was first – but is it the best?

  • Apple works closely with MasterCard and Visa when it comes to developing new payment technologies, especially in terms of ensuring safe mobile payments. Having access to the knowledge and long-standing expertise of MasterCard and Visa is definitely a big plus for Apple.
  • Apple Pay will be available only for iOS users. Since Apple is one of the, if not the, biggest player in the smartphone and tablet market, Apple Pay consequently reaches many consumers.
  • Apple Pay uses NFC technology. NFC stands for near field communication and is undoubtedly one of the major exciting new technologies in mobile communication. It allows the user to complete a payment without having to connect their device to the receiving device. This makes doing payments quick and easy.

Apple Pay’s major weakness: NFC isn’t widely available yet. In fact, many retailers do not have NFC-supported terminals. This makes Apple Pay’s reach very limited.

Samsung Pay

samsung

Following Apple’s example, Samsung has developed its own wallet system which will be available for Galaxy devices soon. Can Samsung challenge Apple in the mobile payments market just like it is doing in the smartphone and tablet market?

  • In an addition to NFC technology, Samsung Pay supports magnetic secure transmission (MST) technology, which converts any point-of-sale terminal into a potential receiving device for Samsung Pay. Essentially, MST makes the payment look like a regular magnetic strip and turns the point-of-sale readers into receivers of magnetic waves, thus making contactless payments possible almost anywhere. Payments at terminals without NFC technology are then possible through Samsung Pay. This is a major advantage for Samsung over Apple.
  • Much like Apple, Samsung is one of the major market leaders in smartphones and tables. In fact, Samsung became market leader in the US in June 2015 thanks to the Galaxy S6. Samsung Pay will therefore be available to masses of users over time.
  • Because of its integration with banks, financial institutions and payment companies (including MasterCard and Visa), Samsung Pay has a much larger pool of retailers it can reach than its competitors.

Samsung Pay’s major weakness: Though Samsung’s MST technology is likely to be a huge hit in the US, it may not be of much value in Europe. The magnetic strip reader is from the European payment landscape, essentially making the MST technology obsolete.

Android Pay

android

Then there’s Google. Though its Google Wallet was released in 2011, it didn’t quite take off as Google had hoped. The additional Android Pay is supposed to strengthen Google’s position in the mobile payments market. Will Google succeed?

  • Google Wallet is available for iOS 6 and up as well as Android 4.4 and up. Android Pay will be available to all devices that support NFC. This makes Android Pay a threat to both Apple and Samsung.
  • Android Pay will allow full integration of payments apps, which enables users to further simplify the payment process.

Android Pay’s major weakness: It is still unclear when exactly Android Pay will be released. In this day and age, it is vital to keep up. Rumors have been going around suggesting the release might take place within the coming weeks, while other sources suggest it may take up to the beginning of next year. Apple and Samsung may very well consume the market if Google doesn’t act quickly. While Google Wallet supports NFC, it is unclear at this time what improvements we can expect from Android Pay.

I think that in the end, the decisive factor in the battle for the mobile payment market will be innovative and – perhaps most importantly – usable technology. As it stands, both Apple and Samsung have delivered a compelling product. I’m curious to see what developments we can expect over the years, since clearly the tech giants have only scratched the surface when it comes to mobile payments. For now, Samsung Pay seems to have the largest potential with its technological highlights and extensive reach. Surely, Apple will come with a response soon enough. Google should not be ruled out either, who knows what their Android Pay will bring?

Sources:

http://www.information-age.com/industry/services/123459796/five-contenders-kicking-mobile-payment-revolution-europe

http://www.bankingtech.com/342271/banks-notable-by-their-absence-at-apple-pay-uk-launch/

http://betanews.com/2015/05/22/apple-pay-to-launch-in-europe-this-summer/

http://www.bbc.com/news/technology-33489066

http://www.ibtimes.com/samsung-pay-vs-apple-pay-vs-google-wallet-why-magnetic-tech-gives-samsung-advantage-1833158

http://www.topfunded.com/mobile/samsung-pay-takes-on-apple-pay-and-google-wallet-with-tap-to-pay-nfc-technology/

http://www.informationweek.com/it-life/samsung-takes-smartphone-lead-from-apple/a/d-id/1321115

http://www.engadget.com/2013/10/08/loop-wallet-mobile-payments/

http://www.topfunded.com/mobile/samsung-pay-takes-on-apple-pay-and-google-wallet-with-tap-to-pay-nfc-technology/

http://www.planetbiometrics.com/article-details/i/3145/desc/apple-pay-coming-to-british-mastercard-customers-from-july/

http://hollandfintech.com/will-winner-mobile-payments-apple-google-samsung/

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2 responses to “Tech companies and their entry into the world of mobile payments: an introduction and examination of the players”

  1. 346450ms says :

    Until now, I was not up-to-date about these developments within the online payment industry. Thank you for this clear explanation of the different players. However, I am somewhat sceptic towards this new development since it raises several privacy and security issues. Firstly, let me start with contactless debit cards. I think a lot of people received this renewed debit card by now. Without any explanation and information regarding security, and after several discussions with some friends, I started using this new way of payment. Fortunately, I am very careful with regard to my wallet, so I might not be an easy target for fraud. Although, a friend did lose her debit card and waited several days before she blocked it (in case she would find it again). Surprisingly, she noticed several depreciations during this ‘lost’ time. How about insurance? She did not report her card stolen immediately and therefore, she was uninsured and her money was not returned. Should you immediately block your debit card? Doesn’t this increase the number of ‘loss/stolen’ reports and a bank’s administration (and cost)? You are able to opt out of the contactless option, at ABN Amro though, but that does not make much sense (from a technological view). Research, done by Which?, shows that contactless card fraud is too easy. They accessed (‘stole’) key card details with cheap, widely available card scanners and used these details to make online purchases up to 3,000 pounds. These facts, together with stories from acquaintances, make me doubt this new way of paying. Although fraud is still remarkably rare, I have no idea what the future will bring. More and more personal information is gathered and this information becomes more easy accessible to criminal minds. In the UK, banks declare less than 1% of their customer base asks to opt out of contactless. I wonder whether this is due to technology’s appreciation or whether it is due to customer’s ignorance?

    In my opinion, these arguments can also be applied to the mobile payment industry, since the adoption of it has been slow. I believe new ways of payment require new (and different) approaches towards privacy and security.

    I am very interested in everyone’s opinion, since this is a subject covering daily (or weekly) routines.

    Sources:

    http://www.theguardian.com/money/2015/jul/23/contactless-card-is-too-easy-says-which

    http://www.theguardian.com/money/2015/jan/17/contactless-payments-banks-force-us

    http://www.wired.com/insights/2015/01/mobile-payments-adoption/

    http://www.laptopmag.com/articles/mobile-payments-is-the-convenience-worth-the-risk

  2. gabriellapimpao says :

    As you mentioned in the post Android Pay’s release date was unclear but finally it is out since this week: http://techcrunch.com/2015/09/10/android-pay-googles-apple-pay-rival-goes-live/#.w3p0rw:lLX3 also Samsung Pay will be available in the US later this month. For more details watch Thursday’s Crunch Report from the 2nd minute: http://techcrunch.com/video/android-pay-now-live-in-u-s-in-1m-locations-crunch-report/519071305/

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