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The status of major mobile payments systems

December 29, 2015

The year 2015 is almost at its end, but mobile payments are just beginning to see the popularity in the U.S. that they enjoy in other parts of the world. Before 2016 arrives, here is a look at how some major mobile payments systems have fared. 

The year 2015 is almost at its end, but mobile payments are just beginning to see the popularity in the U.S. that they enjoy in other parts of the world. Over the next few years, more and more consumers will turn to mobile payments technology to replace traditional credit cards in everyday transactions. 

Before 2016 arrives, however, here is a look at how some major mobile payments systems have fared. 

Apple Pay
When Apple CEO Tim Cook announced his company’s mobile payment system in September 2014, he issued a promise that Apple Pay would be something wholly new. To battle the skepticism inherent in the American consumer, Apple gave its technology a security process called tokenization, in which, the Christian Science Monitor reported, a unique token – rather than a credit number – is given to the retailer.

In the 15 months since Apple Pay launched, it has faced some of the same problems other NFC-enabled systems have. These include issues with compatibility, as only the newest iPhones have NFC chips, as well as the monolithic obstacle of overcoming consumer’s comfort with traditional credit cards.

Apple and Android are in a battle for mobile-payment supremacy.Apple and Android are in a battle for mobile-payment supremacy.

“I think the biggest obstacle right now here in the U.S. is that it doesn’t solve an obvious problem,” James Wester, an analyst with the market research firm IDC, told the Monitor last month.

But things have begun to turn Apple’s way in the last year. When its system kicked off, there were only a couple hundred thousand NFC terminals in the country. By the time 2016 arrives in a few days, there will be more than 1.5 million. That number will only continue to climb. By 2020, Berg Insight projected, 70 percent of merchants worldwide will rely on NFC point-of-sale terminals. 

Android Pay
Google Wallet has been around a lot longer than Apple Pay – it was first revealed in 2011 – and over the years it has worked at a steady pace to unveil unique new services. Earlier this year, they released Android Pay, a mobile payments system that simplifies and consolidates Google Wallet’s various functions in a tap-to-pay app. 

For months analysts wondered how Android Pay would muscle in on the crowded mobile payments market, especially with Apple Pay dominating so much of the conversation, but Google’s partnership with more than 700,000 stores, in addition to its recently announced vision for a wider, single payments platform realized through in-app purchases, has bolstered its standing. 

Google, with good reason, expects Android Pay to take off in 2016 as consumers come to be more fully involved in the mobile commerce market and their payments system expands into Australia. 

Samsung Pay
Designed to be compatible with a wider range of NFC terminals than Apple or Google’s systems, Samsung Pay works with both new NFC technology and the EMV-enabled terminals so prevalent all over Europe, but which have failed to catch on here in the U.S., the Monitor reported.  

There is one big condition, however, that has created problems for the Korean company’s service – it can’t be used for purchases that require a buyer to insert a card, like at gas stations and ATMs. 

The fact that Samsung Pay is restricted to a small number of phones hasn’t helped it reach a wider market, though that may change with the release of its Gear S2 smartwatch. 

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