Apple Pay and Google Pay: Do we need to wrap up warmly?

Simply holding the smart phone or smart watch over the payment terminal at the supermarket, confirming the payment with a click and the process is complete. Mobile payment offers clear benefits compared with awkwardly looking for cash. Despite this, the market shares of mobile payment processes are still at a comparably low level. Studies show that this finding applies not only to Germany, but that the situation in the USA is very similar. Many Asians are way ahead, in India and China especially many more people use their smart phone for money transfers. The entry of Google and Apple on the mobile payment market brings hope for change here in Germany. A good opportunity for me to take a closer look at the mobile payment landscape.

Mobile Wallets

Usually, money transfers in smart phones or smart watches are usually made with what we call mobile wallets. Various digital payment methods or a credit balance can be stored in these mobile wallets, and they also enable other applications. These include functions such as authentication of the holder, but also couponing and loyalty programs or ticketing. The communication between the end device and the POS takes place via NFC, the mobile network or Bluetooth. These new technologies are mainly supported by a positive user experience. So they offer money transfers without media discontinuity and at the same time offer high security standards. Digital wallets integrate the payment process into the lifestyles and daily routines of consumers, and also accelerate the check out process at the POS. Due to the user-friendliness, there are already numerous solutions, and the most important providers to date are the Sparkasse and Volksbank banking networks, as well as Payback Pay, Postbank, Deutsche Bank and other providers.

The market entry of Apple and Google brings with it great expectations. Both groups offer similar solutions, based on the mobile wallet principle enabling payment via NFC. The user needs to link their credit or debit card of a payment partner with their Apple or Google account, which will be used to process payments. At the POS, they then only need to hold their device to the payment terminal and as such trigger the contactless payment process. Unlike Google, Apple prevents third-party providers from accessing the built-in NFC chip and iPhone or iWatch users can only use Apple Pay. Android devices, however, also allow the installation of third-party mobile payment apps. In each case, it must still be clarified whether the relevant device is compatible. This is because most older iPhones and lower-priced Androids lack the technical conditions for the apps.

Now to the users. E-commerce companies must also take into account a few points before offering one or both payment methods. Firstly, neither Apple nor Google require the conclusion of a separate agreement for the use of their payment apps. However, developer or retailer accounts are required, which must accept the relevant guidelines for use. Of course, shop software supporting the integration of the payment methods is required in all cases, and retailers also need the right payment service provider. Because both Apple and Google do not work with every payment service provider and acquirer.

My conclusion for e-commerce companies:

First clarify the technical requirements for your systems and also check your payment partner, as the introduction of Google Pay and Apple Pay is not always problem-free.

Regardless of what your software landscape looks like and what your strategy is, mobile payment offers manifold potential for stationary trade and e-commerce equally.

The positive user experience alone should in my opinion ensure that smart phone payment will gain a relevant market share. The great benefit for trade and banking, as cash handling ultimately requires many resources, will also add a certain nudge in this direction. So my tip is quite clear: You as a retailer can reinforce the attractiveness of your shop with mobile payment options, because many consumers appreciate a simple shopping and payment experience.