Under pressure from Apple and low-cost Android handset manufacturers, in February Samsung acquired proximity payments and wallet pioneer LoopPay. It also announced Android Pay, an API for developers to implement their own payments service. In February, Google acquired Softcard assets, agreeing to pay AT&T, Verizon, and T-Mobile to preload Google Wallet. mobile payments alone are expected to rise to $142 billion in 2019), Google is soldiering on in payments, mainly aiming to capture payments data by tracking purchases, to enhance its search-and-advertising business. But recognizing the stakes are huge ( according to Forrester, U.S. While in theory Google’s open system should foster payments innovation, it has failed to gain much traction, and Apple’s platform control has given it an edge. Although more open (less of a controlled environment than Apple), Google relies on third-party handset manufacturers, has less ability to migrate users to its current operating system, and employs host card emulation (HCE), enabling service providers to store and retrieve payment credentials in the cloud rather than on the handset’s secure element. Other Payments Providers to Watch Since 2005, Google has struggled in payments, despite its ample resources, the world’s most widely used mobile operating system, and a 67 percent share in search. Google is soldiering on in payments, mainly aiming to capture payments data by tracking purchases, to enhance its search-and-advertising business. Some of its brand loyalists would more likely switch credit card providers than stop using Apple Pay. Some analysts attributed this to Apple Pay’s security (to reduce fraud, Apple Pay stores tokens rather than card numbers on the handset’s secure element and employs fingerprints for authentication), but rather it is because Apple could credibly threaten to shift spend between card issuers. Unlike other wallets, out of the gate Apple was able to demand a piece of banks’ revenues – 15 basis points for credit cards. But astutely, the Cupertino tech giant embraced them by tapping into the traditional card payment process, and instead focused on features and functions, increasing its chances of success at enhancing the iOS platform and customer loyalty - its real aim. Some had hoped, while others feared, it would attempt to upend existing payment systems. The Apple Pay Effect Last October, Apple launched its mobile wallet, Apple Pay. But a host of giants still remain committed to building mobile payments platforms. Many high-profile wallets already have because they were too early and/or had flawed approaches and shareholders: mobile network operators EE, O2, and Vodafone shuttered their joint venture Weve O2 pulled the plug on its own wallet Jack Dorsey’s much-hyped and richly valued new-age Square wallet was abandoned last year France’s Worldline and mobile network operators Bouygues Telecom, Orange, and SFR threw in the towel on Buyster and recently (after reputedly spending one billion dollars) AT&T, Verizon, and T-Mobile ditched Softcard. Because of this value, a mobile payments land rush is underway with hundreds of digital wallets vying for payments share, ranging from venture-capital-backed startups to long-standing industry titans. Apple could credibly threaten to shift spend between card issuers. And they offer a potentially powerful means to engage consumers. They bridge e-commerce, mobile commerce, and payments at the physical point-of-sale. They provide Internet-connected platforms with the ability to store and manage payment keys as well as loyalty, reward, and promotional programs. Payments initiated from handsets, commonly known as digital wallets, are becoming more valuable. It’s a significant development because mobile phones now expand the point of sale to anywhere and will change how consumers, merchants, and value-add suppliers engage around payments. By Eric Grover, principal at Intrepid Ventures After years of hype and disappointment, the mobile payments market - specifically payments initiated from handsets - is heating up.
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