Wallet Wars

AndroidpayMobile payments, in one form or another, have been in existence for just about as long as smartphones themselves. But, with Forrester predicting that mobile wallet usage will reach critical mass over the next two years, the competition between NFC payment technologies has really started to heat up over the past 12 months. Weve seen a flurry of launches, with plenty more yet to come.

With most offerings very similar on the surface, weve collected together four of the biggest players in mobile payments today – and tomorrow – for a quick guide on what makes each one worth keeping tabs on, and where they might be headed next.

Launched: October 2014. Available in: US, UK, Canada, Australia
Growing out of Passbook, the wallet app for coupons and loyalty cards that Apple launched back in 2012, Apple Pay was the mobile payments launch the industry had been waiting for. As well as in-app payments, Apple Pay enables in-store payments via NFC, on compatible iPhone handsets and the Apple Watch.

Before its US launch, with the formidable weight of Apples brand behind it, Pay seemed like the thing that would finally push mobile payments into the spotlight. Its launch didnt exactly transform the landscape overnight, however, and we still havent seen any official adoption figures, but it certainly looks like a success.

On Apples Q4 earnings call, CEO Tim Cook said the service is “seeing double digit growth in transactions month after month”. Figures from the analyst CIRP show that nearly a fifth of the entire US population were in possession of an iPhone 6 or higher by September 2015, meaning theyre able to make in-store payments through Apple Pay – but according to Pymnts.com, 83.4 per cent of potential users still hadnt tried it. Nevertheless, this means there are around 2.8m regular users of the service in the US, equivalent to 1.4 per cent of the adult population.

Apple Pays real strength – and the area where Apples influence seems to have really come into play – lies with the sheer number of partners. The number of financial institutions supporting Pay broke the 900 mark at the start of this year. On the merchant side, meanwhile, Apple announced it was targeting 1.5m compatible locations in the US by the end of 2015, and big name brands including Starbucks, Dominos Pizza and KFC are already signed up to start accepting NFC payments this year.

So whats next for Apple Pay? Well, most importantly, given that its only available in four countries, a wider global roll-out. Its set to launch next in Spain, Singapore and Hong Kong as well as mainland China through a partnership with China UnionPay, and were likely to see more as the year goes on. There have also been reports that Apple is working on a peer-to-peer payment service, enabling users to send money to their friends Pingit-style, as it draws everything together within the rebranded Passbook app, now called Apple Wallet.

Launched: September 2015. Available in: US
Googles answer to Apple Pay had a similar genesis, growing out of Google Wallet, with one key difference. Instead of being a new addition to the mobile wallet, NFC payments actually launched with the original app way back in 2011, alongside digital loyalty cards and peer-to-peer payments. With the launch of Android Pay last year, Google was actually moving in the opposite direction to Apple, which seems eager to consolidate its wallet and payment services, by lifting the feature out of Google Wallet and spinning it out into a standalone app.

By paring the platform down to just the payment functionality – removing the extraneous features, and the slightly strange option to transfer funds onto a physical card – Google was able to integrate Android Pay more closely into its OS. As with Apple Pay, NFC payments can be accessed without having to open an app, by simply touching the handset to a contactless terminal.

However, nearly five years on from its first appearance, Android Pay still hasnt launched outside of the US. Thats set to change this year, with an Australian launch promised in the first half of 2016, in partnership with six financial institutions. Google says it is planning a wider global rollout this year, but hasnt yet named any specific countries.

Launched: August 2015. Available in: S. Korea, US
Samsung Pay has one major difference to its competitors: as well as NFC, it supports EMV (the smart card standard established by Europay, MasterCard and Visa) and, more importantly, MST (Magnetic Secure Transmission), the standard used by most credit and debit card readers, meaning it can be used with almost any pre-existing till. With NFC terminals still few and far between in many markets, including the US, this gives it a huge potential advantage.

The sticking point, though, is that Samsung Pay is only compatible with a small selection of Samsungs top-tier devices. Users need to own one of the Galaxy S6 range of smartphones or the Galaxy Note 5 phablet – the Gear S2 smartwatch is also compatible but requires pairing with one of these handsets. This could prove a real difficulty given that S6 sales have flagged in comparison to the devices predecessors.

In spite of that, Samsung is the only company to have released hard figures on adoption. In September, it announced that Samsung Pay was used for 1.5m transactions in the first month after it launched in South Korea, totalling some ?35.1bn (£20bn) in revenues, with 10 per cent of users making payments on a daily basis.

However, S. Korea is home territory for the firm, and theres been no such word from the services somewhat muted US launch, which followed the next month. Whether this changes as Samsung Pay spreads to new markets – European and Chinese launches have been promised this year – remains to be seen.

Launched: January 2013. Available in: China
With 400m registered users, and a 60 per cent share of the third-party payments market, Alipay dominates mobile payments in China. Not all of those are necessarily using Alipay for in-store payments – the service also covers online payments and peer-to-peer transfers – but it certainly has strong support from merchants. Alipay is accepted by around 40,000 Chinese supermarket and convenience store locations and 130,000 restaurants, including KFC and McDonalds, plus smaller merchants like taxi drivers and market stall vendors.

Both Apple and Samsung are launching their own services in the country this year to challenge this dominance, but Alipay might be too well-established for them to present any real competition. If theres any real threat to Alipays position, it may well come from within the country, in the form of Tencents WeChat Payment service.

Its worth noting that the key biggest difference between these Chinese services and those from other countries is that they dont use NFC for in-store payments. Instead, both Alipay and WeChat rely on QR codes. At least in part, thats a result of the apps earlier launch date, but it isnt to say that Alipay is lagging behind its competitors technologically.

In December, it launched facial recognition for user authentication. Last July, the app rebranded from Alipay Wallet to Alipay 9.0, describing itself as a Super App which includes a sort of miniaturised social network nested within it, where users can message friends and browse a timeline of posts. And if retailers are willing to invest in a sensor, there is an alternative to QR codes in the apps sound wave functionality, which emits a specific frequency to confirm payment.

Boxout – On The Horizon
CurrentC is the flagship product of MCX (Merchant Customer Exchange), a joint venture between some of the biggest names in US retail, including 7-Eleven, Best Buy, Target and Walmart, first founded back in 2012.

The app combines loyalty and coupon functionality with in-store payment via QR codes, and also uses Bluetooth beacons for positioning. The app will be accepted by all of the MCX members – not something to sniff at, given that they together account for over $1 trillion of sales in the US each year. Thats still some way in the future, however, as CurrentC is currently limited to a pilot in Columbus, Ohio, with just 12 of the brands accepting it in select stores.

MCX was at the centre of a small controversy in early 2015, after some members withdrew NFC reader technology from their stores in order to undercut Apple Pay, resulting in a campaign of negative reviews on CurrentCs app store listings. Whether this will impact on its success at launch – pencilled in for early 2016 – remains to be seen.

Last December, Walmart became the first US retailer to offer its own mobile payment service, with the unveiling of Walmart Pay. “Initially available in a small number of stores in Northwest Arkansas”, with a nationwide rollout promised by the end of H1 2016, the potential audience for the service is huge: 140m Americans shop at Walmart each week, and its app – where the Pay feature will be nested – is used by 22m customers each month.

Walmart might have been the first retailer to jump into this market, but it wasnt alone for long. Days after the announcement, reports emerged that Target was working on its own mobile payment offering. Notably, both retailers are members of the MCX – potentially bad news for CurrentCs chances, and possibly even for the mobile payment market overall, as the landscape becomes increasingly fragmented.

Its not just retailers jumping on the mobile payments bandwagon, either. JP Morgan Chase, the largest bank in the US, has its own service on the way in the form of Chase Pay. Details are still a little thin on the ground, but it appears that Chase Pay will be QR code-based.

JP Morgan has signed a deal with MCX – them again – which not only means its partners will accept Chase Pay, but also feature it as a payment option in the ConnectC app. This deal was struck after the bank agreed to take a smaller cut of purchases made via Chase Pay than traditional plastic cards. Its these costs – still intact with the likes of Apple Pay – which are ultimately the motivation behind retailers launching their own payment services.

Chase Pay is due to launch around the middle of 2016, initially for owners of Chase credit and debit cards, giving it a potential userbase of 94m customers in the US from the off.

This article first appeared in the February 2016 print edition of Mobile Marketing. You can read the whole issue here.