According to a recent research by TrendForce, a Taiwan-based analyst firm, 2016 will see a a 37.8% year-on-year growth in mobile payments, which means consumers all over the world are predicted to spend a total of US $620 Billion in 2016 as compared to $450 Billion in 2015. The research also predicts that total mobile payment volumes will climb up to $1.08 Trillion by 2019.
Adding on to that, mobile payments have been gaining significant traction over the past few years, especially in physical locations. According to a recent report by Prepaid International Forum, 24% of adults in the UK alone have used their smartphones to make in-store mobile payments and 12% do so on a regular basis.
Therefore, it goes without saying that several factors, right from the growth in the adoption of digital payments, the debut of non-traditional players, to the rising importance of ‘contextuality’ and self-service, are fast driving and changing the dynamics of the overall mobile payments space.
Currently, there are three notable mobile payment systems, namely Android Pay, Apple Pay, and iBeacon technology, that are fast being leveraged by businesses and brands to deliver mobile proximity payments. And while it’s arguable to say which of the three has the largest adoption rate amongst consumers, it’s undeniably clear that mobile payments are the future.
In this article, we’ll break down the three to give you a clear and concise understanding how they compare, as well as provide you with all the information you need to gauge which one might be most suitable for you.
The platform, which was first unveiled in May 2015, has been operational in the US since last September – allowing users to make contactless payments through shop terminals, as long as their Android phone, their bank and card provider supports the service.
In their attempt to go head-to-head with arch rival Apple in a battle over consumers’ digital wallets, Google recently launched Android Pay in the U.K in May 2016. This was a very critical launch, given the fact that UK is seen as a key battleground for mobile payments given the wide availability of contactless terminals in the region.
Google has also said that Android Pay will arrive in Singapore and Australia in the first half of 2016, and that it’s working with Australia’s major financial institutions such as Westpac and ANZ, as well as with merchants such as 7-Eleven and McDonald’s to bring NFC payment terminals. The search giant said Android Pay will come to more countries before the year end.
For a long time, the biggest hurdle faced by Android Pay was that it didn’t support a broad range of banks and credit cards. In their attempts to fix this, Google announced Android Pay support for 55 banks and credit unions in May 2016, including A+ Federal Credit Union, Achieva Credit Union, Affinity Federal Credit Union, America’s Credit Union, and many more.
Three of the top banks that currently support Android Pay include Bank of America, Wells Fargo, and Citi. Among them, Bank of America is currently installing NFC into their ATMs around the country in order to allow customers to withdraw cash with just their phone. The bank plans to roll out Android Pay support to about 5,000 ATMs around the country before year’s end. With these additions, Android Pay now supports a total of 102 banks and credit unions. You can check out the entire list of banks that support Android pay here.
Apple Pay –
Image Source: forbes.com
The crosstown rival, Apple Pay, has often been given due credit for ushering mobile payments to where it’s at right now. Introduced back in 2014, Apple Pay has gone on to see the widest adoption amongst consumers in US, UK, Canada, Australia, Singapore and China. Apple has also confirmed that it will soon be rolling out Apple Pay to Switzerland, France, and Hong Kong as well.
Another aspect that Apple deserves credit for is that compared to Android Pay, it is has a wide range of banks ( such as American Express, Barclays, Lloyds, HSBC, Bank of China, Bank of Shanghai, ANZ etc.), retailers (such as Dunkin Donuts, Macy’s, Sephora, Subway etc.) and credit card partners (A+ Federal Credit Union, Alliant Credit Union, Andrews Federal Credit Union etc.), under its belt. You can check out the entire list of banks that support Apple Pay here.
iBeacon technology –
Of recent, beacons have been widely leveraged by retailers to offer contactless payments as a measure to stay on top of the business. We have already discussed about some of the popular proximity payment solutions that are powered by iBeacon technology in our previous blog. Few of the other popular payment systems include:
Image Source: welt.de
(i) Yapital: Yapital is the first payment system in Europe to integrate Bluetooth Low Energy (BLE) technology to offline sales. It leverages iBeacon technology to create a wireless connection between the smartphone and the point-of-sale terminal ‘POS card’ that is developed by POSPartner, a strategic partner of Yapital. It is particularly designed to work in settings without mobile network coverage, such as shops located underground.
(ii) Mozido: Mozido, provides a person-to-person proximity payments service that uses BLE technology to allow users within proximity of each other to exchange funds using their mobile devices instead of using cash. The service provides increased convenience for transactions that typically require cash, such as payments to valet parkers, food delivery drivers, and friends when splitting dinner bills, among many others.
It doesn’t copy or emulate the signal that is generally used when a user makes a contactless payment with his/her debit card. Instead, Android Pay creates a virtual card that’s used to make the transaction. This helps ensure that the actual bank details of a user aren’t involved in the transaction in any manner unlike other standard contactless payment approaches.
While Android Pay comes preloaded on several devices, if a user happens to not have the app on his/her mobile device, he/she can simply download it from the Google Play Store. If the user happens to already have a card in his/her Google account, he/she can simply register it with Android Pay by confirming a few details. If not he/she can simply go ahead and add a new card from any of the participating banks.
Once that is done, whenever a user wants to pay for a product, he/she can simply take his/her Android device, unlock it and wave it over the NFC reader at the checkout counter. As in the case of Apple Pay, users are not required to open an app to make the payment. The total amount being paid and the card being used will be clearly depicted on the screen and the user will hear an Android Pay chime to confirm that the payment has been processed.
It’s important to note that if the user’s phone supports fingerprint authentication, he/she will be able to use his/her fingerprint to confirm the purchase instead of having to unlock his/her phone. If his/her phone doesn’t have a fingerprint reader, he/she will need to manually unlock his/her phone before each payment. This manual unlock requirement helps ensure that the user’s Android device doesn’t accidentally process any payment when it’s within range of an NFC terminal.
As in the case of Android Pay, this mobile payment system also leverages NFC to interact and exchange information with contactless points of sale systems. The feature is baked into Apple’s iOS operating system, thus allowing users to add a compatible debit or credit card to its pre-installed iOS Wallet app, by capturing them with the iPhone’s camera. Once a card is stored on the iPhone, all that’s needed to initiate the process is to place the iPhone in close proximity to the PoS terminal. From there, the user will be prompted to scan his/her fingerprint via iPhone’s TouchID to complete the transaction. As a whole, the process is pretty seamless, just like Android Pay.
And then yesterday at WWDC 2016, Apple announced that it is expanding its Apple Pay payment system from apps to websites, this fall. Mac users will be able to pay online in Safari using a “Pay with Apple Pay” button, and authenticate their purchase using Touch ID on their phone or watch. Once a user is ready to check out online, Apple’s Continuity feature will pull up a prompt on his/her phone or watch to quickly and authentically complete his/her purchase. The user can either use the Touch ID on his/her phone or tap his/her pre-authenticated watch to confirm the purchase, which will automatically process in the browser.
While retail partners will need to integrate Apple Pay into their checkout flow, Apple said it has already signed up tons of merchants to the payment platform. These include companies like Target, Expedia, United Airlines, and more.
iBeacon technology –
While there are a number of proximity payment solutions that are currently leveraged by businesses across verticals, they are mostly powered by the iBeacon technology. This technology equips beacons to power wireless data transfer by consuming minimal amounts of power. These devices continually relay a discovery signal that is received by BLE enabled smartphones within the range of transmission – the approximate range of a beacon is 70 meters.
While most smartphones today support BLE, it is required that the user turns on the bluetooth on his/her phone, in order to receive the signals from a beacon. A comprehensive understanding of beacons can be gathered in our beacon FAQs post.
3) How secure are they?
Android Pay –
In their efforts to ensure that Android Pay is highly secure, Google has added extra layers of security. Once a user has added all of his/her credit or debit cards to Android Pay, their numbers are no longer stored in his/her Android phone. Instead, Android Pay simply creates a unique virtual account number and assigns it to each payment method. This helps ensure that the card details of the user stays safe. And once the user makes a payment, he/she will receive an onscreen payment confirmation that makes it simple to catch any suspicious activity.
Adding on to that, if a user happens to have lost his/her phone, he/she can easily use Android Device Manager to instantly lock his/her device from anywhere, secure it with a new password or even wipe it clean of any personal information.
However, Android Pay is a bit less secure than Apple Pay. Primarily because unlike Android Pay, Apple Pay requires users to provide their biometric ID for each purchase, no matter what. Thus, while no one can leverage a user’s iPhone to pay for something without his /her fingerprint on the Touch ID, Android Pay allows users to pay by simply unlocking their phone.
Apple Pay –
Here too the measures taken by Apple and Google have lot of similarities. For example, as in the case of Android Pay, a user’s credit or debit card number is never shared with a vendor. Instead, a virtual account number is used to process the user’s payment. And unlike other contactless payments, users are required to scan his/her fingerprint via iPhone’s Touch ID or unlock his/her Apple Watch to make payments from his/her device.
Adding on to that, Apple’s ‘Find My iPhone’ app allows users to remotely wipe their device clean completely or quickly put their device in Lost Mode to suspend Apple Pay, if it’s lost or been stolen.
iBeacon technology –
Since beacons are primarily proximity detection devices that broadcast outbound signals, there is no inherent security risk in the transmission. On the other hand, the risk actually lies in the apps that use these signals. In this sense, beacons are no better or worse than any other location service communicating via a mobile device. That said, when it comes to mobile payments, location technologies that enable secured sessions during data transmission like NFC, are generally considered to be more secure when it comes to mobile payments.
4) Which devices are they compatible with?
Android Pay –
Compared to Apple Pay, Android Pay is currently compatible with a wide range of Android devices, as it works on any device that runs on KitKat 4.4 or higher, and has an NFC chip. That green-lights an huge number of devices, including budget phones and tablets like the Nexus 7.
Apple Pay –
However, one of the major limitations of Apple Pay is that it only allows users of iPhone 6 and above (which includes device such as iPhone 6 Plus, iPhone 6S, iPhone 6S Plus, or an iPhone SE) to use their phone for mobile payments. This is primarily because the the earlier iPhone models don’t come with an in-built NFC chip. Adding on to that, iPhone 5S users can also make use of the service by combining it with an Apple Watch.
iBeacon technology –
Unlike Android Pay and Apple Pay, iBeacon technology is compatible across device types (be it iOS or Android) as long as the user has turned ON the bluetooth on his/her device.
5) Which one suits you the best?
Android Pay –
Android continues to remain the world’s most widely used smartphone operating system with 80.7 percent market share, according to a recent Gartner report. Given that, there’s a huge incentive for banks, retailers and apps to join the Android Pay scheme – especially if their competitors have already signed up.
Adding on to that, since Android Pay on any device that runs on KitKat 4.4 or higher, and has an NFC chip, even fairly old phones will be able to use Android Pay, while only the very latest iPhones can make use of Apple Pay.
Thus, Android Pay’s general ease of use and its slick support for multiple payments under £30 (i.e once a user has approved a payment on Android Pay he/she won’t have to use authentication for purchases under £30), it should be able to match up to Apple Pay soon.
Apple Pay –
Since it’s been available for about a year in the UK it’s not all that surprising that Apple Pay is the more accomplished platform when compared to Android Pay, at least for the time being. Also given that Apple Pay payments are comparatively more secure than Android Pay because of the biometric ID requirement, chances are that users might prefer to use Apple Pay to Android Pay, especially when it comes to large transactions.
Also, Android Pay isn’t yet supported by all the major banks , something which Apple Pay users don’t have to worry about. No doubt this will change in the future, however.
iBeacon technology –
It goes without saying that the ‘walled gardens’ of Apple and Android Pay make it difficult to implement the systems and add extra costs to the merchants as they are only usable on the phones they manufacture. This significantly limits the systems customers can use. Other limitations include:
(i)Credit card based systems
(ii) User data owned by Apple et al
(iii) No options for customization
(iv) Added fees
Beacon payment technology gets around these methods using a combination of phone-agnostic beacon technology and a phone app (with Eddystone beacons even the need for an app has been removed). This method allows banks and payment merchants to regain control through a white-labelled solution that is completely customisable.
Thus, iBeacon technology gives banks and retailers the control to implement their own systems, creating bespoke white-labelled devices to the client’s specification with a custom payment system – outside the expensive walled gardens of Google, Apple and Samsung.
Summing up, whichever phone you own (be it Android or iPhone), the good news here is that wireless payment schemes have finally hit the mainstream. And they are far more simpler and clutter-free than having to deal with cash. So which mobile payment system would you opt for? Let us know in the comment below.
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