By Nicole Arce
Long before Apple introduced Apple Pay, Google already had Google Wallet, a similar technology being used by Android phone users to pay for goods at retailers such as McDonald’s, Walgreens and 7-Eleven.
Unfortunately, adoption rate for Google Wallet and other mobile payment systems, such as the unfortunately named Isis Wallet now called Soft Card, are dismal, with no one but the small percentage of technology enthusiasts using Google Wallet to pay for their purchases. But considering Apple’s influence and track record in changing consumer behavior, Apple Pay could finally make secure mobile payments more mainstream.
But how different Apple Pay and Google Wallet really are? Both Apple Pay and Google Wallet use near-field communications (NFC) to send the user’s payment information to the point-of-sale terminal. However, Apple says paying with Apple Pay will be as quick and easy as simply holding the iPhone on the contactless reader and tapping the finger on the screen. In fact, simple as what Apple wants Apple Pay to be, one can see from the story Apple is creating around its new mobile payment system.
Google Wallet, on the other hand, requires users to swipe their phones awake and enter a PIN. If one would take a look at the Google Wallet page on Google’s website, it’s not something that many people would easily understand. The page tells users they can use loyalty cards, share card information and scan bar codes, but that doesn’t paint a picture of what Google Wallet can really do. Apple, on the other hand, creates the need for a mobile payment system by saying that carrying multiple credit cards is a hassle and the magnetic stripes they use aren’t very secure at all. With Apple Pay, consumers can pay for their purchases at more than 200,000 stores nationwide by simply tapping their finger on their iPhones. Most people don’t know where they can use Google Wallet to pay for their purchases.
“The biggest challenge out there really is a lack of education,” says Patrick Moorhead of Moor Insights & Strategy. “First of all, people don’t know where they can pay with their phone or how to do that. Apple, which taught how to use their finger on a phone as opposed to a keyboard, will be able to pull this off.”
Another major concern for Apple is security, especially since Apple Pay was introduced in the wake of an iCloud hacking incident that led to hundreds of private celebrity photos leaked online. Apple has been ramping its efforts to ensure users that their data will be secure with Apple Pay, even publishing additional pages on its website to educate customers about keeping their devices secure.
Both Apple Pay and Google Wallet take advantage of tokenization, a technology already used by chip-and-PIN EMV (Europay-Mastercard-Visa) credit cards commonly used in Europe. Instead of using the user’s credit card information, the system generates a unique security code that will be used to close the transaction. This is an essential security measure that renders any data exposed during a security breach useless. Hackers can get hold of the data, but they will not be able to use it for dubious transactions because they were generated for one-time use.
A major difference between the two systems, however, is that Apple says Apple Pay will have no access to the user’s purchase information except for the most recent purchases listed in Passbook, which also carries the user’s credit card and bank account information. Google, on the other hand, sees information on the user’s purchases, which could make or break the decision for any user to use Google Wallet.
“We are not in the business of collecting your data so when you go to a physical location and use Apple Pay, Apple doesn’t know what you bought, where you bought it or how much you paid for it,” says Apple senior vice president Eddy Cue in what could be a subtle jab at Google. “The transaction is between you, the merchant and your bank.”
However, a significant hole in Apple’s plan to make mobile payments go mainstream is the fact that Apple Pay is only enabled in newer iPhones, which could push the service to a higher-end luxury option instead. Google Wallet, on the other hand, is available in phones running on older iOS 6 and Android Gingerbread platforms. Plus, it is far cheaper for consumers to pay for new chip-and-PIN cards when they start rolling out next year than to get new smartphones.
“Apple Pay isn’t a replacement because an EMV card costs a few dollars to make, whereas Apple Pay requires an iPhone,” says Adam Levitin, law professor and credit law expert at Georgetown University Law Center.
However, until Apple Pay comes out later this year, users have yet to see if mobile payment becomes the next technology to go mainstream. The actual experience of using Apple Pay remains to be seen if it is truly as intuitive as Apple says it will be.