Someday, sooner rather than later, we’ll be using our phones instead of credit cards for all our purchases. But the big question as the technology spreads today is are we — customers, merchants, finance companies — getting into a field that is better or worse for us?
The latest move came from Samsung, which announced at the Mobile World Congress the new Galaxy S6 phones that feature a service called Samsung Pay. It will let you use the phone to pay for purchases by holding it near a receiver at a store and touching your fingerprint to the phone.
Sound familiar? Samsung’s move is similar in more than name to Apple Pay, though it has some different functions. There’s also Google Wallet. And if you are really confused by the names, Google’s Sindar Pichai has announced Android Pay, which is quite different. It’s an API that allows developers to build a credit card payment function into Android apps. (We won’t bother discussing an app called Samsung Wallet in Google Play.)
PayPal enters. And there’s more. PayPal announced it has just bought Paydiant, a builder of mobile payment software specifically for retailers that use their own credit cards. And, of course, there is still the CurrentC plan, backed by big retailers, that will allow a phone to make a credit card purchase with a QR image that appears on the screen. CurrentC was built on Paydiant software and anything PayPal does is likely to have much in common with CurrentC.
Five separate apps on two different approaches are not all going to make it. For Samsung, the big question is what Samsung Pay–the company’s choice of the name showed off its lack of imagination once more–will accomplish. Samsung moved quickly after Apple’s launch of Apple Pay by using the software programming on LoopPay, which Samsung acquired just last month. The design depends on EVM and NFC semiconductors, just like Google Wallet and Apple Pay. [pullquote]For Samsung, the big question is what Samsung Pay–the company’s choice of name showed off its imagination once more–will accomplish.[/pullquote]
Samsung Pay will be available immediately on the Galaxy S6, although Samsung’s announcement did not made it clear whether it will be pre-loaded on the phones or left to be added to S6s through Google Play. Samsung left a mention of Pay out of its preliminary web site promotions on the Galaxy S6, while Apple and Google both promote the credit card offering. If Samsung steps up its promotion, it could easily become more popular than Google Wallet, at least among Galaxy customers with whom it has never promoted the Google offering. Samsung claims it also provides additional security protection through its KNOX mobile security, a potential match for Apple and advantage over Google.
Samsung’s finance interest. Samsung has some support from credit finance companies and retailers, but its position seems some distance behind Google Wallet, let alone Apple Pay. Visa Jim McCarthy, executive vice president of Visa offered a tepid endorsement: “Mobile commerce just got a lot more interesting. Combining Visa’s expertise in payment technology with Samsung’s leadership in creating innovative mobile experiences, gives more choice to financial institutions who want to enable their customers to pay by phone.”
It does seem unlikely that five rival systems will all survive. A grouping into two rival systems seems more likely–Apple, Google, and Samsung combining on the one hand and CurrentC and PayPal on the other. Apple Pay, Google Wallet, and Samsung Pay have significant design differences, but they are very similar at their cores. A critical question remains whether Apple, which has by far the deepest relationship with the credit card industry, wants to control the effort through a union of some sort or whether it wants to keep Apple Pay limited, as it now is, to iPhones.
The roles of PayPal and CurrentC is more obscure. The purchase of Paydiant means PayPal owns the technology behind the design of CurrentC, but commonality beyond that isn’t clear. While the approach is not tied to hardware requirements like the competition, it does not provide the security or ease of use. What it has going for it is mainly distaste for Apple and for banks in the retail industry, but that could offer some success.
ADDITION: Though Apple Phone was blamed for the use of fraudulent cards, the error was the fault of banks, not Apple, and was as likely to go on with the Google or Samsung apps. The problem was that banks were accepting the registration of credit cards stolen, including some of the big card thefts. The problem was a lack of proper checks before registering the card accounts and the banks are now toughening it,