abril 21, 2016 8:02 am
Contactless payments are taking off, with Apple, Google and Samsung all offering services of their own. After Apple Pay was introduced in late 2014 in the US, the service started to get traction in 2015. Towards the end of the year, two other big names arrived to the space: Google gave a new lease of life to Wallet and reset the system as Android Pay, and then, Samsung launched its Samsung Pay service. They all essentially work in the same way, using NFC, a technology that I covered a couple of posts ago.
There are hundreds of thousands of locations in the US where contactless payments can be used, however few consumers are currently using mobile payments – only 18% of North Americans, mostly millenials and high income households – according to a recent Accenture Suvey.
Smartphones may be an essential part of modern life, but consumers’ purchasing habits have been slow to adapt. And even with so few consumers actually using this technology, tech companies still think things will start to change soon.
Compatible Devices: iPhone 6 (and Plus), iPhone 6S (and Plus), Apple Watch
Apple has been leading the way in the effort to move consumers from physical wallets packed with credit cards to a world in which an iPhone or a watch does all the work.
Apple Pay supports most major credit and debit card providers as well as US banks and is currently in around one million or so locations in the US. It can also be used to pay in some of the most popular apps in the App Store. Store credit cards don’t work right now, although there are rumors that some major retailers may be adding their store cards in the coming months.
Compatible Devices: Most NFC enabled Android devices. At launch, the service was compatible with 70% of Android devices.
Android Pay can be used at the same locations that Apple Pay (or anywhere with a contactless terminal), however the service is compatible with a lot more phones. Google says it works across 1 million US locations, including everywhere tap-and-pay payments are accepted.
The wider compatibility makes Android Pay the most attractive option of the three major services, however it’s well behind Apple in the number of banks that support it according to Yahoo. Also, very few apps support it for in-app purchases at the moment.
Samsung Pay is perhaps the most interesting of the three services because it not only supports NFC but includes technology called “magnetic secure transmission” (MST), which mimics the magnetic stripe of a credit card.
What does this do? Instead of the million or so NFC-enabled payment terminals, Samsung claims users have nearly 30 million places where they can use Samsung Pay. But there’s one big warning to this widespread compatibility: If you have to insert your card, MST doesn’t work because the signal is not strong enough.
On the other hand Samsung Pay does not yet support payments within apps at all.
It’s easy to assume that these three payment systems are one in a long line of disruptive innovation. However, it’s certainly not the case, they are not behaving as disruptors here, they are acting as resellers. In future posts I’ll talk about how the financial services industry is facing a wave of digital disruption that is starting to reshape the sector.