Amid a deluge of payments announcements, three or four will have a big impact in the coming months and years. Some common market trends were also seen amongst the million dollar bets.
Mobile World Congress (MWC) is typically where the industry’s direction is made clear. For those of us involved in payments, Barcelona gave us plenty to think about.
Apple Pay, Android Pay and PayPal Jump the Gun
Not all announcements were made at the conference but they were certainly on the agenda. It was the first MWC since Apple Pay’s launch and Samsung were tipped to respond alongside the S6 unveiling. They didn’t disappoint and added some spice with their acquisition of LoopPay. Google hit back with talk of “Android Pay” and, with a little less fanfare but potentially as much impact, PayPal acquired Paydiant, one of the major tech vendors involved with MCX. This gives PayPal a brandable mobile wallet with loyalty integration. But where does this leave us?
Mobile Payments in 2015 – NFC, Cloud & Tokenization
On one hand we have Apple. It owns the hardware and the OS, and its relationships with card schemes and banks (at least in the US) seem to be in place already. Once enough EMV near field communication (NFC) terminals roll out to make it a go-to payment method, Apple Pay will be a force to be reckoned with. With launches in more countries predicted soon (countries with much larger acceptance infrastructures) we can anticipate impressive usage statistics in the next 12-18 months.
Samsung Pay looks very similar – EMV, tokenization, NFC, eSE and fingerprint authentication – but with a twist that could have a real impact. The integration of MST, the magnetic stripe, tap solution from LoopPay. This may be a short-term, one-market play but it’ll give them significant bragging rights in the “my transaction volume is bigger than yours” debate.
Don’t Forget Google’s Android!
Samsung doesn’t own its OS, so where does Android and perhaps more importantly, Google, fit in? The search giant added its own twist with the acquisition of tech from Softcard, killing a competitor and getting Google Wallet preinstalled on devices from AT&T, T-Mobile and Verizon in the process. Well played. Again a US-only move for market share, but the big players seem so keen to dominate this important market that they’ll make multi-million dollar acquisitions to get our American friends tapping.
Google also shared a teaser about “Android Pay”, an API that will allow third party developers to launch innovative payment schemes by leveraging host card emulation (HCE). Google Wallet won’t die (allegedly) but will be integrated with Android Pay. Google also claims that they won’t compete with Samsung and will look to bring the technologies together. Keep an eye on the formal launch at the developer conference in May.
TRENDS: EMV, NFC & Tokenization
As we look back at the last few months and search for common threads, what do we see? EMV, NFC and tokenization. The first two are somewhat predictable and although tokenization has been implemented in many HCE pilots it has become better known as the security tech behind Apple Pay. We should also bear in mind that Apple Pay is not just about in-store, but also in-app, payments. This seems to be the position that Google is taking with the Android Pay API and PayPal has made its play with the acquisition of Paydiant.
In-store & In-app Payments Converging
So how do we tie this together? Well, the line between in-store and in-app is blurring. I can use my mobile to make a payment on a merchant website using an Apple Pay token. But, if I’m standing in the merchant’s ‘bricks & mortar’ store, I can use that token (or one from Android Pay, Samsung Pay or within my bank’s mobile app) to tap on the POS. PayPal is spreading from online to in-store. Apple and Google are moving from in-store to online. As the battlefield gets broader, the prize is getting bigger.
On top of this, the card schemes are placing their bets, but they’re not gambling. They’re supporting pretty much all of the above. And what about the banks? Well, since Apple dominates its ecosystem, they’ll have to fall in line for iPhone access, but for Android, they can maintain control and seem intent on doing so. Both Visa and MasterCard are reporting multiple HCE-based launches planned for this year, with Visa saying seven will become thirty by year end. MasterCard has also reported projects in 15 countries.
So there is a lot of activity, with a lot of investment by some very powerful players. There are however a couple of common themes and therefore a couple of safe bets; be it tap or in-app, right now it’s all about EMV and tokenization.