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Big things are happening in mobile payments

March 5, 2015

Things are happening in the mobile payments space. Technology industry players are not just developing new apps, they are also developing platforms that help other companies develop their own mobile payment options. Recently, Google and PayPal made moves in this new sub-genre of mobile payments and demonstrated that electronic transactions are not simply approached from one angle alone.

Things are happening in the mobile payments space. Technology industry players are not just developing new apps, they are also developing platforms that help other companies develop their own mobile payment options. Recently, Google and PayPal made moves in this new sub-genre of mobile payments and demonstrated that electronic transactions are not simply approached from one angle alone.

A new approach from eBay and Google in the mobile payment industry
CNET reported that PayPal, the payments subsidiary of eBay, will acquire startup company Paydiant. The target company is known for having helped clients like Capital One and Subway develop their own mobile payment options. Paydiant was founded in 2010, is based in Massachusetts and is also part of the Merchant Customer Exchange. The exchange, made up of retailers like CVS and Rite Aid, is currently working to launch its own mobile payment service called CurrentC. Some retailers want to avoid paying the transaction fees associated with payment systems like Apple Pay, and CurrentC is an attempt to do that.  

The news source also discussed Google’s new mobile payment platform called Android Pay. Similar to Apple Pay, the technology uses near-field communications, but it is not a standalone app. Android Pay is meant to serve as a platform for developers to integrate their own mobile payment options. Forbes noted comments by Sundar Pichai, senior vice president of Android, Chrome and Google Apps.

“We are doing it in a way so that anybody else can build a payments service on top of Android,” said Pichai, according to the media outlet. “In places like China and Africa, we hope that people will use Android Pay to build innovative services.”

Samsung Pay isn’t a platform, but it does something new too
The Wall Street Journal reported that Samsung Pay is different from other mobile payment products. It will allow customers to link their debit, credit and loyalty cards to their Galaxy smartphones and make tap-and-pay purchases. However, the technology differs from Apple Pay and Google Wallet because it does not rely on NFC, which is not yet widely accepted by retailers. The strength of Samsung Pay is that it will appeal to retailers who do not want to upgrade their point-of-sale device, because the technology is already compatible with most sales terminals that are magnetic stripe readers. Samsung acquired mobile payment firm LoopPay to include its technology with newer Galaxy phones. Samsung Pay has also joined with card networks like Visa, MasterCard and American Express. Some analysts believe that the new product has the potential to take some market share away from Apple Pay and others.

What the mobile payment industry looks like today
Things in the payment industry became more interesting after the introduction of Apple Pay. Previously established services like PayPal and Google Wallet benefited from the increased media attention to the sector. Apple Pay was rolled out to consumers with the iPhone 6 and 6 Plus, and less than three days after the debut, approximately 1 million credit cards were added to the service, noted CNET.

The media outlet also indicated that the industry is poised to witness significant growth in coming months. Next year mobile payments are expected to increase to $27.5 billion, up from $3.5 billion in 2014, according to eMarketer research. The number of people using digital wallets is also expected to double during that period. Bryan Yeager, an analyst at eMarketer explained that the increased deal activity is a sign things are picking up.

“Recent deal activity in the payments space shows the importance of becoming consumers’ platform of choice for making payments with their phones, and PayPal’s acquisition of Paydiant would give the company a strong foothold for in-store retail mobile payments – an area where it has historically struggled to gain traction,” said Yeager, according to CNET.

Android Pay is probably the most unique venture. As previously stated, instead of expanding on payment apps, Google is approaching the situation from a new direction. Allowing developers to use its platform to create and manage their own mobile payment options could result in accelerated growth for the industry. Android Pay will work with Google Pay, and Forbes noted that the company will work with Samsung as well.

Ultimately, there may be many potential synergies between Android Pay and other payment systems. This will likely be a pivotal year in the history of mobile payments. With all the recent developments in the sector, it is hard to know which product will win out as the preeminent mobile payment service. Many industry experts expect Apple Pay to become the must successful over time, but it is important to remember that PayPal has been around for a lot longer and currently has the most market share.

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