Mobile Payment Wars

By Phillip Garton

Payment Wars


Not too long ago in a galaxy not too far away–namely our own–a conflict started to brew. Four companies are battling for dominance of your electronic wallet. Google Wallet is the most established of the four, but it struggles with adoption due to spotty support among devices and retailers. Apple Pay is a young payment system that has been well trained in the ways of user interface, marketing, and strategic partnerships; with fast adoption, it has gained interest from everyone. Softcard is the youngling looking to learn and grow.  It offers solutions for Android and will be preinstalled on Windows phones. They are reaching to Apple to guide them and have reached out to form an alliance. CurrentC is the empire of retailers that wishes to have its own form of mobile payments outside of NFC by blocking NFC and tempting consumers with exclusive deals and loyalty rewards.

In this ensuing battle, it’s more than just light and dark. Each have similarities, but their differences stand out. We will look at the good and bad of each so you can pick your side and help who you believe should win this war!

Google Wallet – The old ways

Google Wallet has been around since 2011 and didn’t see a high adoption rate due to low device support and unavailability of NFC technology at many retail locations. Despite the lack of support from retailers and devices, Google still has produced a suitable electronic wallet solution that requires only a Gmail address.

In Google Wallet, you can maintain a balance similar to what you can do with PayPal, using it for transactions. You can also add your bank accounts, credit cards, and debit card for use in transactions. Within Google Wallet you can also add reward, loyalty, and gift, and you can even clip coupons to your Google Wallet that can be redeemed at retail stores at point of sale.

All of this is useless if you can’t use it where you want to. Google Wallet uses NFC technology for point of sale purchases, so any where you see the NFC logo you can make a purchase with it. But Google Wallet is much more than just point of sale. If you have your debit card saved in Google Wallet, you can use Google Wallet to withdraw money from your ATM where supported.  Google Wallet allows for transactions to be made in support apps and websites as well, you can even send money from one of the accounts saved in Google Wallet to anyone who has a Gmail account.

All this functionality is useless without security. Google Wallet app is secured with a PIN code that you set. All transaction information is also sent to your phone allowing you to keep tabs on where your money is going. Google also offers 24/7 fraud monitoring and you can disable the app or you card from your account any where you have access to a computer. Google also promises that all your financial information is encrypted and stored on their secure servers. But this is also a drawback, as it is well-known that Google captures information on its users for marketing reasons and uses this to support its other monetizing streams for targeted marketing.

Google Wallet has enjoyed recent growth thanks to Apple Pay. Transactions with Google Wallet have increased by 50% due to the proliferation of NFC thanks to Apple’s marketing and partnership agreements to increase awareness of NFC payment technologies.

Apple Pay / Passbook – Return of the…Apple?

Apple Pay, introduced in October 2014, has informed the general public of mobile payment technology. With its ease of setup, marketing, and retail support channels, it has introduced NFC and electronic wallet on a scale that could only be dreamed of.

Apple Pay is a function of Apple’s already existing Passbook feature on iOS devices. Apple Pay is easy to setup, you can use your card that is already attached to your iTunes account or you can add a new card either manually or by taking a picture of your card and providing the security code on the back of the card. Being included as part of Passbook you also have access to your loyalty cards and gift cards all in one spot!

Apple Pay would be DOA if it was only easy to set up, but thankfully Apple throught through the process and made it easy to use as well. For point of sale, transactions there is no need to wake your phone or put in a PIN code. Simply place your phone near the NFC payment terminal and use your TouchID to submit the payment… transaction DONE!

With 200,000+ retail locations supporting Apple Pay, it just got a whole lot easier to spend your money. Apple Pay isn’t just for point of sale purchases either. It can be used on supported apps and websites to pay as well. If the site doesn’t support Apple Pay, Apple Pay will use your store information to populate the sites purchasing information. No more retyping the information over and over again.

Again, what is convenience if you sacrifice security? All payments in Apple Pay use a device account number and a transaction specific dynamic security code so your actual card number, name, and other personal information is never shared. If your iOS device is ever lost or stolen, you can use Find My iPhone to lock Apple Pay or wipe the device. But Apple takes this one step further. All your identity and transaction information is kept private because your name, card number and secuirty code are kept on your device and is not stored by Apple. Apple says they are in the business of processing payments, not your information, reportedly taking a 0.15% cut of each purchase made.

Apple Pay appears to be the early giant to beat, welcoming 1 million cards within the first 72 hours that it was released. Whole Foods also announced that 150,000 transactions were completed in their stores using Apple Pay within the first 3 weeks of release. But Apple isn’t stopping there: rumors are that Apple has a loyalty reward program in the works to increase the draw to use Apple Pay.

Softcard – Misguided Youngling

Softcard was announced in 2010 but remains to be a rather young, immature product. Softcard boasts that it is installed on 60% of Android phones and will be preinstalled on Windows phones by the end of the year as its NFC payment method.

Softcard, like Apple Pay and Google Wallet, allow you to add cards and bank accounts as payment methods. However, the only cards currently supported are American Express, American Express Serve, Chase, and Wells Fargo. However, Softcard states that you can add an unsupported card or bank using a Serve account. You can also add your loyalty, membership, and rewards cards. To draw more users, Softcard also issues special loyalty coupons.

Security is also a focus for Softcard as the app is PIN code protected and information is stored in secure storage on the device. If your phone is ever lost or stolen, you can remotely freeze your Softcard account. Softcard uses a unique transaction ID for each transaction and your individual transaction data is not stored.

Softcard would appear to be a strong electronic wallet solution, but it suffers from similar adoption issues that Google Wallet has.  Being on an even less popular Windows phone does not help matters. Having uninformed retailers and the additional hurdle of having to open the app and enter a PIN code to place a transaction has kept this would be contender out of the big fight. This has prompted the CEO of Softcard to reach out to Apple to try to form an alliance or allow for its app to be installed on iOS devices (an even lesser likely of happening).

CurrentC – The empire is trying to strike back

The Merchant Customer Exchange (MCX) was formed in 2012 when merchants like Walmart, Target, Shell, and CVS all banded together to try and come up with a mobile payment option that would allow them to sidestep the credit card companies and eliminate the 2-3% fees they were being charged per transaction. Something that’s is made by a company to save that same company money can’t be bad, right?

CurrentC differs in a few major ways from it fellow combatants. This is the only mobile payment solution that doesn’t use NFC, and this is the only solution that doesn’t take bank credit cards or debit cards. CurrentC wants direct access to your bank account, but also allows gift cards or select store credit/debit cards. This allows MCX to offer its retailers the chance to be relieved of the 2-3% per transaction changes. But what do you the customer get for saving them money? CurrentC supports loyalty and reward programs which automatically are linked after entering to your purchases. CurrentC also offers unique coupons and promotions that again are automatically used during check out.

Some people would say if its fast and easy and I get to save a little money along the way, then nothing else really matters. Well, in my opinion, that is where CurrentC starts on a dark path. To use CurrentC you first open your phone, open CurrentC, and then the cashier gives you a QR code to scan. CurrentC then in some cases presents a QR code (which takes sometime to create) that the cashier then has to scan to complete the transaction. Even longer holiday lines anyone? In addition, CurrentC took a “fast” way at the fuel pumps and made it slower. To use CurrentC at a fuel pump, you first select to pay with CurrentC, then you are prompted for a code that you get from the app, enter the code and pump your fuel.  I think I am going to still use my card at the pump–at least I can do that with my gloves on!

Security is another place the CurrentC seems perform well on the surface, but as you dig deeper, you find the flaws. CurrentC is PIN code protected, and each QR code (called a “paycode”) is secure through a unique ID for every transaction. However, from there we see the darker side to CurrentC: all your information is stored on an encrypted cloud.  None of your information is stored on your phone. Normally that would be okay, but recently the CurrentC cloud server was hacked and email addresses were obtained for a pilot group for Target. In addition, your transaction information is tracked so more offers can be given to the consumer regarding the products purchased. Taking into account the sensitive information being stored and the fact it has already be hacked before, an official roll out brings into question how secure your data actually is.

CurrentC has major hurdles to overcome.  Ease of use, questionable security, and the fact that members of the MCX have disabled NFC payments bring questions about its ability to succeed. One research found that the app was also accessing information not pertinent to purchases, stating “CurrentC borders on the creepy line, due to it pulling health info. He also that found that its Terms Of Service leaves high liability for fraud to the user if someone else is able to get access to a user’s phone and make CurrentC payments.

Fortunately retailers signed a three-year exclusive deal with MCX to use CurrentC in 2012, which will expire some time in 2015. CurrentC is slated for a early 2015 launch. Whether retailers will stay onboard or turn on NFC and allow payments with Apple Pay and Google Wallet is remain to be seen, but some retailers are already stating that the exclusive deal has months not years left on its life.

Who will win the mobile payment wars?

The question comes who will win the mobile payment wars? Apple Pay is heavily favored due to its marketing and retail partnerships which are expanding every day. Google Wallet will be a passive winner in this as NFC infrastructure expands. Its usage is already expanding on the back of Apple.  Softcard will improve with Windows Phone support. But with low market share of Windows Phones, it will not be a major player in the mobile payment market without more support. CurrentC seems to be dead even before it launches. With the reported hack and the backlash from consumers regarding the blocking of NFC from major retailers, consumer support will be low and won’t survive the war to come!



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