Like electric cars and smartwatches, mobile payments are all the rage in the technology world these days.
Although the technology is by no means new, tech giant Apple's (NASDAQ:AAPL) rollout of Apple Pay last year ignited an arms race in the mobile payments space as only Apple's entry into a market can.
As a result, we've seen a flurry of movement on the mobile payment front from other serious tech giant players, most notably Google (NASDAQ:GOOGL) (NASDAQ:GOOG) and Samsung (OTC:SSNLF). So, which of these recently launched mobile payments systems can challenge Apple Pay? Let's find out.
Google Wallet gets an upgrade
Google originally launched Google Wallet in 2011 to much fanfare but frustratingly scant adoption. However, late last month, Google fundamentally changed the game for Google Wallet when it struck a deal with Softcard
For those that aren't familiar, Softcard is the mobile payments platform backed by the likes of AT&T, Verizon Communications, and T-Mobile. As part of the deal, Google will partner with Softcard and also acquire some of its intellectual property. What makes this deal so compelling is that as part of the deal, Google Wallet will be prominently preinstalled on Android-based smartphones in the U.S. that run Android's KitKat OS or later, giving Google Wallet premium positioning that should help spur much-needed adoption.
This deal should also prove a win for AT&T, Verizon, and T-Mobile investors as Google will reportedly pay them to feature Google Wallet properly on the smartphones they sell. However, this move will possibly provide a secondary benefit to Google as well. Some have speculated that the increased uptick in transaction data resulting from broader Google Wallet adoption could help bolster the ad rates Google charges for its less profitable mobile ad business.
What about Samsung Pay?
Samsung rolled out its Apple Pay response when it unveiled its latest Galaxy smartphones at the recent Mobile World Congress. However, Samsung Pay will differ in several key ways from both Apple Pay and Google Wallet.
Powered by the technology it acquired when it bought LoopPay last month, Samsung Pay allows for the same near field communication transactions as Google Wallet and Apple Pay. However, Samsung Pay also allows Samsung smartphone Galaxy S6 and S6 Edge users to pay for goods and services through the more ubiquitous magnetic strip payment processing terminals. And since such magnetic strip terminals make up nine of every 10 point of sale terminals, Samsung Pay will enjoy a significant advantage in terms of immediate usability over either Apple Pay or Google Wallet.
At war with each other
Apple Pay seems to lead the discussion whenever the topic of mobile payments arises these days, and it certainly deserves mentioning here. However, that being said, it seems to me that Google Wallet and Samsung Pay are far more likely to compete directly against one another, rather than with Apple Pay.
The difference between Apple Pay competing with Google Wallet or Samsung Pay and the potential conflict between the latter two is that Google Wallet and Samsung Pay's showdown will take place within a single smartphone. Since Samsung is by far the most dominant Android-based OEM in the U.S., any consumer that purchases the Galaxy S6 of S6 Edge will have to choose between either Google or Samsung payment options. And with the greater breadth of payment locations offered by Samsung Pay, it certainly makes sense consumers would gravitate toward Samsung Pay over Google Wallet when the two appear in the same smartphone. For non-Samsung Android smartphones, Google Wallet seems well-suited to thrive.
By contrast, Apple Pay's potential rivalry with these two essentially ends with a consumer's smartphone purchase decision. Certainly one service's features could help tip the scale of whether a given consumer in the U.S. buys an iPhone or a Galaxy S6 or other Android-based smartphone for instance. However, once that battle has been won or lost, the two services won't vie for a share of a consumer's payments. It's also worth briefly noting that Google Wallet does have an iOS app. However, given the overwhelming popularity of Apple Pay, Google Wallet strikes me as unlikely to be a factor here.
Mobile payments are the future, like it or not. So while this budding space continues to take shape, I see Google Wallet and Samsung Pay as far more likely rivals in this space, especially given Google's recent Softcard deal, rather than either of them being potential threats to Apple Pay's iOS dominance.