This post was updated on April 7th, 2015, to account for the acquisitions of Softcard and LoopPay.
With the launch of Apple Pay last month, there has been a lot of buzz in the world of mobile payments. Mobile payments are not new, but competition has greatly increased as the deadline for retailers to become EMV/Chip and Pin compliant nears. The race for market dominance is still going, but we’ve outlined some of the most popular and up-and-coming products on the market today.
Apple Pay is the most recent development in the mobile payments world, and was simultaneously announced with the new Apple iPhone 6, 6 Plus, and the Apple Watch. All of which are Apple Pay compatible. Apple Pay relies on NFC (Near Field Communication), which is a form of short-range wireless communication. Simply load your credit card information into Apple Pay and start making payments by holding your phone near a NFC-compatible payment terminal. Apple Pay is incredibly easy to use, and is more secure because it uses a tokenization process as opposed to sending the actual card information. Apple has also simplified the secure purchase process by requiring the user to use the built in thumbprint scanner to authorize the purchase, unlike others that require a pin or password.
Similar to Apple Pay, Google Wallet also relies on NFC technology. However, instead of using tokenization like Apple pay, Google Wallet assigns a MasterCard number that is unique to your phone. The MasterCard number acts as a virtual credit card, and when you use it to pay Google then charges the debit or credit card on file. Any U.S. debit or credit card can work with Google Wallet, and retailers only see the virtual MasterCard number as opposed to your actual credit or debit card number. Google Wallet also requires a pin for each purchase, which increases the security if you were ever to lose your phone.
CurrectC is a new mobile payment option being developed by Merchant Customer Exchange (MCX), which is a consortium of major US retailers like Wal-Mart, RiteAid, Sears and Target. Expected to launch in early 2015, CurrentC will connect to the user’s bank account and will utilize a barcode scanned at the payment terminal to complete the transaction. Seeing that CurrentC is a retail-backed competitor to Apple Pay, a few of the retailers disabled their NFC capabilities to fight against the adoption of Apple Pay. More drama ensued when the CurrentC database was hacked, and email addresses from the pilot program were compromised.One major drawback to CurrentC is the lack of fraud protection. Unlike Apple Pay and Google Wallet, if a CurrentC users phone is stolen and purchases are made, that user is liable for all of the fraudulent charges. Many critics of CurrentC say the payment option only benefits the merchants, allowing them to avoid credit card fees, place fraud liability on the consumer, and profit off information gathered about their customers.
Softcard (formerly ISIS Mobile Wallet) is another NFC-based payment tool that is run through the Softcard app. Backed by large mobile carriers AT&T, Verizon and T-Mobile, Softcard requires a special SIM card that varies by carrier and is only available on compatible Android and Windows devices. Similar to Google Wallet’s virtual MasterCard number, Softcard uses a virtual American Express card to process transactions which gets tied back to the users debit or credit card. Interesting fact: Softcard officially changed its name from ISIS Mobile Wallet in September 2014 to avoid confusion with the identically named terrorist group. We think they made a solid choice!
UPDATE: Softcard was officially acquired by Google in February 2015, confirming rumors dating back to early January. An important aspect of this acquisition is the intellectual property held by Softcard which Google now owns. Also as a result of the Softcard acquisition, Google Wallet will come pre-installed on all Android phones sold by AT&T, Verizon and T-Mobile.
PayPal has long been a player in the virtual payments world, but recently joined the brick-and-mortar race by introducing their new mobile payment functionality. The functionality is unique in that it requires the customer to “check in” to the store they are visiting through the PayPal app. The “check in” notifies the store and sends them the customer’s payment information. From there, payment is as simple as telling the cashier you want to use PayPal. PayPal is accepted at a variety of retail chains such as Famous Footwear, Abercrombie & Fitch, Barnes & Noble, and many others.
Another intriguing mobile payment option was recently developed by LoopPay, a Boston-based company that invented and patented Magnetic Secure Transmission (MST). MST mimics the action of swiping a card through a magnetic card reader by transmitting the same signal by simply tapping the device near the card reader. LoopPay requires the use of one of their phone cases or the LoopPay Fob, which could deter some customers. However, the use of LoopPay is convenient as it can be used virtually anywhere that accepts credit cards, and in a small way side-steps the war between NFC and MCX. LoopPay also requires a 2-step password and pin process which increases security if you ever lose your phone or fob.
UPDATE: In one of the most interesting moves in 2015, LoopPay was officially acquired in February by Samsung. This is a lucrative acquisition for Samsung as it now powers it's upcoming mobile payment solution Samsung Pay, which will immediately be a strong competitor of Google Wallet and Apple Pay. Samsung will integrate LoopPay's MST technology into it's new Galaxy S6 and S6 Edge, which will immediately compete with ApplePay.
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