Pay Pay Pay Payday!

  • By Vince Kadar
  • Tuesday, June 09, 2015

In recent years, we have seen massive investment and transformations take place in the world of mobile payments. The idea of mobile payments being in our everyday lives has gone from being what seemed to be a fad to slowly making its way into a permanent option for payment transactions. What has been an interesting ongoing development in the world of mobile payments has been how both Apple and Samsung are strategically setting up the chess board, and with Android (Google) giving the space another run for the money.

In September of 2014, Apple had announced they would be launching Apple Pay as a new service that would revolutionize transactions.  Apple pay has promised to make transactions more efficient, secure through tokenization, private through the convenience of the Apple touch ID, a new NFC antenna design and a dedicated Secure Element chip.  Apple touch ID allows the user to quickly make a transaction without unlocking their phone, providing the user with an experience far more efficient than using an actually credit or debit card. The new antenna along with the Secure Element chip provide a higher level of security by eliminating merchants and cashiers from seeing your name and credit card numbers and replacing these with Device Account numbers and securely storing these in your Apple device, decreasing the risk of credit card fraud. Each transaction performed through apple pay is authorized with a one-time unique number using your device account number to increase security for an added layer to their security feature. Apple is stating that this revolutionary method of payment will change quickly change our lives due to its unique, efficient and safe technology.

However, shortly after Apple had launched Apple Pay, Samsung announced that they would be launching their own method of payment, Samsung Pay, resembling Apple Pay quite a fair bit from my perspective.  Samsung much like Apple, has promised this alternative to plastic cards will once again revolutionize transactions. With the convenience of having your credit card located in your phone, along with high security software, Samsung pay will deliver a secure and efficient way to pay.

Although both methods sound identical at first, there are some differing elements. Similarities will include the use of fingerprint touch ID to access the account to pay, both eliminate the use of a physical wallet, and both promise to eliminate (or at least reduce) the risk of credit card fraud. Differences would include, the accessibility efficiency to pay; where Apple has the touch ID that allows you to pull up your account to pay without even having to unlock your phone, where Samsung has additional steps to perform transactions, increasing the time it takes to pay, although it has not been tested yet in the “real world”.

The idea of both software seem to be excellent ideas when you first hear what both companies will be doing, however I can only wonder if these new payment methods will provide a benefit.  For starters, both Apple Pay and Samsung Pay are only compatible with the newest technology models (Samsung Galaxy S6, IPhone 6 and 6plus, Apple Watch, etc.), eliminating the use for those with older models produced by the companies; only those who remain current can actually use these payment methods.  Apple requires that the merchants must have updated technology be able to support these payment methods whereas Samsung Pay can use existing merchant payment infrastructure as well as the new payment terminals; minimizing investments by merchants.  Purchasing and converting from the status quo of payments to adapt to these new systems are costly and can take time to fully transition.

Not all merchants will be willing to adapt to the new payment methods however with the move to EMV in the USA, to catch up with the rest of the world, will prepare the market to adopt the newer technologies.

So who has the potential competitive edge?  With the slow rate of adoption by merchants for newer merchant payment technologies I do believe that Samsung may have a competitive edge in the USA.   However, in markets where NFC terminals have been widely adopted and NFC smartphones have been largely accepted by consumers however not a great deal of mobile NFC payments have been transacted across these networks.   However recent reports state Mobile Wallet usage is surging!

For Android Pay…..let’s wait and see; again.