Apple Pay and Google Wallet – Is this the Future of Money?

October 16, 2014

3:00 pm

There was a time when watches were for telling the time, phones were for making a call, and wallets were carried in pockets. The future could become as cashless as the Stone Age albeit with payment terminals and machines galore. The apparent push into mobile wallets aims to do exactly that. Today, Apple announced the launch date for Apple Pay.

Apple Pay Goes Live October 20

Apple announced its foray into mobile enabled payments recently with the introduction of iOS 8 and the launch of iPhone 6. Apple has finally embraced NFC, the much talked about technology, which will be used for mobile-enabled payments at NFC terminals. Apple Pay is scheduled to launch on Monday, October 20. Apple has partnered with numerous companies on the banking and retail sides, and the number has grown significantly since the initial announcement. Apple Pay will be accepted in 220,000 stores across the U.S. including Panera, Starbucks, Target, Staples, OpenTable, Disney, Uber, and McDonalds.

Passbook, the application designed by Apple to store coupons, tickets, boarding passes, and the like, will be used to store credit & debit cards with the help of the iSight camera. Position the card within the given frame and it will capture the contents of the card once you have entered the card security code. There will also be an option to type the information manually. The first card entered becomes the default but the user can choose any other card from Passbook.

Security is the biggest detractor to the future of mobile payments. Apple aims to address this issue by not storing any information on their servers, rather on the Secure Element chip on the iPhone. Upon storing a card in Passbook, a unique Device Account Number is generated and assigned to the card. This is an encrypted number stored on the chip, so retailers will be unable to see the card information while no information will be transmitted while paying online. Every payment will be authorized by Touch ID which adds another layer of security. The ‘Find my iPhone’ feature lets the user locate, lock or erase contents of the phone in case the device is lost. In addition, Apple promises to not store your payment history which ensures zero tracking of your shopping behavior. Apple Pay will only work on the latest Apple devices – iPhone 6, 6 plus, and the Apple Watch.

Google Wallet

Google introduced its own wallet way back in September 2011, though the adoption rate has not been as high. Google Wallet is only available in the US and it works on iPhone as well as Android phones with listed carriers. You can check the list here.

The summer of last year saw Google announce the integration of Google Wallet with Gmail, which allows users to attach money with their email, which is then automatically debited from the corresponding wallet. The recipient will receive the email and the amount will be credited to their Google Wallet. This feature is also only available in the US for users 18 years and older. The wallet can be funded by adding money via the user’s bank account or debit/credit card. Once the wallet is funded, the user can pay for items online or by using NFC at physical payment terminals. In addition to the Google Wallet, users can opt for a physical card that emulates the user’s Google Wallet for swiping at stores that lack NFC terminals. Google charges no annual fee for the Google Wallet Card. Another handy feature with Wallet is that it lets users send money to another account, add balances and track expenses.

Google claims its fraud protection covers 100% of verified unauthorized Google Wallet transactions in the US. It offers Secure Element by the traditional physical chip or by the cloud-based host card emulation (HCE). The Google Wallet app is protected by a 4 digit security pin. “The Privacy Policy for Google Wallet indicates that much of the data is stored but may not be shared outside Google except under certain circumstances.” This rather ambiguous statement raises privacy concerns among users.

Conclusion

According to CNET, as of April 2014, Apple has 800 million iTunes accounts, most of which are linked to credit cards. As of February 2014, Google has 540 million active Gmail users, says NY Times. So the attach money option in Gmail comes as no surprise. The game seems to be subscriber base, where Apple is clearly miles ahead. On the other hand, Google Wallet is not locked to Android devices, and currently offers its services to Apple devices which are on iOS 6 or above.

The imminent wars in this space are seeing other competitors with similar initiatives. One such example is PayPal. Apple has denied partnership with the online paymaster, which means PayPal is looking to carve out its own niche in mobile wallets. Not to forget the numerous other players like Softcard, Square, Coin and others who are pushing the boundaries with mobile wallets. All this buzz and activity seems to be pointing towards mobile wallets becoming the money of the future.

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Mehul Nayak is a digital marketing consultant at Softweb Solutions Inc and Softweb IoT- an IoT solutions provider company based in Chicago. He is responsible to enhance brand awareness & increase visibility of company product and services through digital way. He wants to built strong relationship between his organization and tech users to grow business effectively. Please share your ideas using our Twitter handle @softwebchicago

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