Google held its I/O Conference for developers last week and announced two new initiatives. First was Android Pay, which is essentially a digital payments system that consumers can use to buy things online or in stores from retailers and others who also use the service. It works almost identically to Apple Pay, Apple’s mobile payments product and functions both in online and offline transactions.
As with Apple Pay, Google will let customers verify their identity using their fingerprint, a technique that will be built into the next version of Android. And Android will copy Apple Pay’s approach to security by offering tokenization to provide merchants with a customer’s payment information without having to hand over their actual credit card number.
The second initiative is called Google Wallet. This is not the Google Wallet of old, though. It is a new peer-to-peer payments system rivaling the PayPal Venmo service. Google Wallet is a way for customers to quickly and easily transfer money to each other’s debit or bank accounts.
Apple is preparing to announce details about enhancements to Apple Pay at its worldwide developers conference later this month. Those include a rewards program for the mobile wallet service.
With more consumers willing to make purchases using smartphones, companies are rushing to take the lead in the market, spurring eBay’s PayPal to heavily market a suite of mobile apps, while start-ups like Square and Stripe expand their payments processing software to small and midsize businesses.
“[Apple and Google] want to be as disruptive to payments as Amazon has been to retail,” said Sucharita Mulpuru, a retail and payments analyst for Forrester Research. “By being early they can shape the customer experience and expectations.”
“Apple Pay has given it a really big shot in the arm, but even that is nascent,” Jan Dawson, an independent technology analyst for Jackdaw Research said. That leaves plenty of room for another company, like Google, to grab a slice of the market, he said.
Another potential headache for Google is Samsung, the world’s largest handset maker and the top seller of Android devices. The South Korean manufacturer acquired LoopPay, another mobile wallet competitor, this year. That offering could divide Samsung smartphone users who may have to choose between Google’s wallet and Samsung’s LoopPay product.
Now all Google, Apple and PayPal have to do is persuade consumers that these new payment methods are better than paying the same way they have always done — smartphone-free.