Another (insert brand name) Pay is about to launch…
As you are probably aware by now, Google released their updated/new(?) wallet last week called *mock shock* Android Pay. This mobile payment system will include many of the same features as Apple Pay, while the specific Google Wallet brand will continue as a peer-to-peer service. So that makes three mobile payment systems and counting, with the same(ish) name. Can’t wait for Windows Pay to launch*.
While Android Pay probably has its roots in Google wallet, its newest features — including fingerprint recognition for in-store and in-app payments — appear to be built on the foundation that Apple Pay established in October 2014. Android Pay, like Google Wallet, will work on all versions of Android operating systems back to KitKat, which launched in 2013 and enabled Host Card Emulation (HCE) technology for contactless payments.
But Google isn't bringing on every feature of Apple Pay. The Apple wallet requires access to the handset's secure element, but Google is sticking to its model of using a virtual MasterCard for point of sale purchases instead of storing account details on the phone itself. By doing this, Google say they can avoid some of the concerns raised by the inconsistent enrolment processes used by issuers to link their cards to Apple Pay.
Google is also setting the stage for a more collaborative mobile payment system. "We believe the same partnership model that fuelled Android's growth will enable Android Pay," said Dave Burke, vice president of engineering for Google, during his presentation at the Google I/O developer conference. Android Pay is an open system, Burke said, meaning it will allow developers to support in-app payments for third party applications, accessing features such as fingerprint authentication to create a consistent experience across the Android operating system. "Android Pay is cloud based, which provides the flexibility for all of the players [in mobile payments] except for Apple, which is hardware based," said Richard Crone, a payments consultant. "This will spur everybody on to develop mobile pay technology."
While Apple has been gaining market share with every new iPhone model released, Google's operating system still controls a majority of the mobile phone market in the U.S. and worldwide. Samsung is also planning its own mobile payment system for Android handsets, using an alternative technology that does not require most merchants to upgrade their point of sale hardware. We did a brief ‘Android Pay - the basics’ post late last week that you can read here.
Some commentators in the industry are claiming that with this latest release, Google and Apple have created a situation where the mobile wallet could have reached its limit, citing a number of factors. Todd Coulter, CEO/Founder at EyeBuy, Inc., in a post titled ‘Game over for M-Wallets’ makes a couple of strong points when looking at both companies. First, “they control the OS of the two most dominant phones in market today and are on every phone moving forward – all the other mobile wallets have to be downloaded and engaged and that is a major hurdle to overcome”. Secondly, “Apple and Google are deep into turning their Passbook and G-Wallet more into a "personal hub" that can consolidate and enhance the shopping experience with all roads leading into it (i.e. coupons, sharing, payment, loyalty, rewards, LBS, virtual reality etc.,)”. Coulter also takes a look at MasterCard and Visa with the comment, “Visa/MasterCard both claim to have either an m-wallet or m-wallet container but I actually don't think they really care since both of the OS payment schemes are built to keep Visa/MasterCard rails as the rule. They win either way but they also have to fight lack of direct consumer engagement with their own offerings – something that Google and Apple are very good at tackling.”
I wonder if he has a point?
I also spent a lot of time reading comments that accompanied many of the reports on the Google Android Pay release. To sum it up succinctly; the wallet is launching first in the US (again) to a decent amount of interest from the technology sector but no realistic merchant infrastructure in the real world day-to-day ecosystems. Unsurprisingly, Google is receiving scorn and impatience from those other parts of the world that already have the ecosystem in place and could bring immediate mobile wallet scale and ramp-up (e.g., UK, Australia, Canada, Asia etc). I mean come on, realistically the US is only just starting to follow EMV specifications and practises with Chip and PIN - are they really ready to scale up mobile payments? Despite the impression that these companies like to give that everything starts out there?
I am looking forward to the slew of mobile wallet releases this summer in those parts of the world that can actually do something with them immediately. I doubt I am alone in this sentiment.
Steve Atkins
Contactless Intelligence
* I have not heard any more than everyone else. Just a wild guess from my side…
