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Google Teams Up With 3 Wireless Carriers To Combat Apple Pay
HughPickens.com writes AP reports that in an effort to undercut Apple's hit service Apple Pay, Google is teaming up with three wireless carriers by building its payment service into Android smartphones sold by AT&T Inc., Verizon Wireless and T-Mobile USA. Besides trying to make it more convenient to use Wallet, Google also is hoping to improve the nearly 4-year-old service. Toward that end, Google is buying some mobile payment technology and patents from Softcard, a 5-year-old venture owned by the wireless carriers. Financial terms weren't disclosed but Apple Pay's popularity probably helped forge the unlikely alliance between Google and the wireless carriers. Google traditionally has had a prickly relationship with the carriers, largely because it doesn't believe enough has been done to upgrade wireless networks and make them cheaper so more people can spend more time online.
The biggest challenge however is one that both Apple and Google face: Only a small fraction of the 10 million or so retail outlets in the U.S.–220,000 at last count–have checkout readers that can accept payments from either system. Both wallets use a radio technology called Near Field Communication to send payment, and it's expected to take years for most stores to be upgraded. What's at play? The big tech companies and carriers seem convinced that our phones will eventually replace our wallets. For carriers, that could make mobile wallet technology table stakes over the next few years as they compete for consumers.
The biggest challenge however is one that both Apple and Google face: Only a small fraction of the 10 million or so retail outlets in the U.S.–220,000 at last count–have checkout readers that can accept payments from either system. Both wallets use a radio technology called Near Field Communication to send payment, and it's expected to take years for most stores to be upgraded. What's at play? The big tech companies and carriers seem convinced that our phones will eventually replace our wallets. For carriers, that could make mobile wallet technology table stakes over the next few years as they compete for consumers.
Usually purchase speed is in this order:
1: Debit card. (user swipes card, enters PIN, done.)
2: Credit card. (user swipes card, signs, done.)
3: Cash.
4: Checks.
From what I've seen at stores, people fumbling for their phones at stores is actually slower than the coupon-clipper with the checkbook.
If Google's mechanism goes via credit cards like Apple Pay, it would be useful, should I lose my wallet, as a backup mechanism. However, if it is ACH based like CurrenC... then I would avoid it at all costs, since all it takes is one bad transaction, and I'm cleaned out with no recourse.
"The biggest challenge however is one that both Apple and Google face: Only a small fraction of the 10 million or so retail outlets in the U.S.–220,000 at last count–have checkout readers that can accept payments from either system."
That's not the biggest challenge. The biggest challenge is that it is no more convenient or reliable to pay a bill with my smartphone than it is with a credit card. My credit card doesn't run out of power. And I don't have to worry about it not getting a good connection inside a store. And I don't have to worry about pulling out a $500 phone and juggling it around every time I want to pay for something.
By Oct 2015 most banks will be issuing smart credit cards that make it much harder to commit fraud. Some of them will come with NFC and support "tap to pay' just like a smartphone. But they will be much cheaper and much more reliable.
Paying by smartphone is a solution in search of a problem.
My experience:
1. ApplePay, when the store has implemented it right (about 2 seconds, hold up device, done)
2. Debit Card (about 20 seconds to swipe and enter pin)
3. Credit Card (about 30 seconds to swipe and sign)
4. Cash (about a minute to make change)
5. ApplePay, when the store has implemented it wrong, and required the user to fill in a form on the terminal.
6. Checks.
The correct ordering is:
1) Cash: 15 seconds or less
2) Credit/debit card: 45 seconds or more
Most of my transactions are at self-checkout kiosks for either groceries or gas. Swiping a card is much faster than fumbling with cash. If the transaction is under $50, the kiosk doesn't even ask for a signature, it is just swipe and go.
Last year, Softcard bribed me - cash, Amazon gift cards, etc. to use their service.
This year, they stopped, and I went back to swiping my credit card.
The problem is that Softcard payment requires more steps than you think:
1) Unlock phone
2) Open app
3) Type in 4-digit pin (why can't I use my fingerprint?)
4) Tap
Also, the tap is not as easy as you think. The first time you do it like the video, it probably won't work. On my S5, the sweet spot is actually in the middle of the phone horizontally across middle of NFC reader, and once I figured that out, I usually succeeded on the first try. However, some card readers just suck and will frequently require multiple tries. Rite Aid card readers, before they stopped accepting it, were the most likely to have this problem (and it was always the same ones at particular registers that gave me trouble).
The way it SHOULD work is that I put my phone over the NFC reader, it asks me for fingerprint, and done. Reality bites.
Your ordering is wrong.
The correct ordering is:
1) Cash: 15 seconds or less
2) Credit/debit card: 45 seconds or more
3) Smart phone: 1 minute or more
4) Checks: 2 minutes or more
What kind of lame POS system does your coffee shop have? When I go to Starbucks or Peets, it takes me the same amount of time to hand over my card as it does to hand over cash, the difference being that it literally takes them only a second to swipe it, and by they time they hand it back to me, the transaction has already been approved, no signature required.
I don't see how cash could possibly be faster unless I hand them exact change, but even then they still have to count the bills and put them in the drawer, so even if *my* transaction is faster, the next patron has to wait.
I was visiting the USA (California is nice this time of year) last week and I had to sign little pieces of paper with my name to buy things with my credit card. Apparently none of the stores and restaurants have chip and pin terminals. You can't prevent even the most basic fraud if any guy with a card reader can make a copy of your magstripe and clone your card. What's worse, in the restaurant they actually walked off with my card, instead of bringing a wireless terminal to my table for me to enter my PIN. You good people are about 5 years behind the times. WTF happened?
None of them can see the clouds; The polished wings don't care.
I have no idea why I'd want to use my phone instead of a card.
There is also some potential increase of security:
Unlike (nearly) every card(*), the phone is a device that has its own display and input interface.
Meaning that you don't need to trust the payment terminal(**).
- No risk of skimmer trying to read you PIN: you're typing it into your own phone, not on the terminal which could have been hacked/modded.
- You can trust the amount displayed (again, you are reading your own phone's screen, so even if the terminal is hacked to display a lower sum and actually bill a higher sum, you'll notive the discrepancies).
Also, the phone has connectivity, which allows out-of-band confirmation for the transaction (***).
Thus, the device is protected against fraud that could menace a classical card.
- hacked terminals showing bogus transaction amounts, or trying to record your PIN.
- hackers trying to relay a transaction (small amount are "tap/swap only": no signature neither PIN asked. It's possible to use a powerful antena pointed at a wireless credit card to remotely use it and relay communication to a terminal).
Saddly, the phones have their own problems:
- they eat batteries like candy (even wireless credit card transaction are remotely powered by the terminal. Whereas a dead phone is dead and can't be used for paying).
- again, they are conencted. Which means that they could be compromised themselves. (Specially since people tend to install tons of crap).
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(*): I've seen banks issuing cards used for e-banking that have a build-in screen and keypad. Similar devices are in theory possible on a credit card.
(**): lots of e-banking card reader do exactly that: you can check on the screen what you are asked to sign.
(***): That's a security feature that's also offered by combining classical credit cards and separate connected device. I can be asked to confirm by SMS / by voice call when the bank detects unusual traffic on my credit card.
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