The rumble for dominance in the mobile payments space is heating up very quickly with Paypal, the soon-to-be spin-off of eBay, and Internet giant Google, both making fresh moves to make sure Apple Pay doesn’t dominate the burgeoning industry.
Paypal said Monday that it is acquiring Paydiant, a startup that provides mobile payments technology to deepen customer loyalty for merchants and banks, such as Subway and Capitol One, for use in their own apps. Launched in 2010, Paydiant is part of Merchant Customer Exchange, a consortium of big retailers working on the CurrentC mobile wallet for activation later this year. Terms of the deal with PayPal were not disclosed.
Paydient says its “open platform enables retailers to reinvent the wallet in collaboration with banks, networks, payment processors and other stakeholders without involving new intermediaries.”
Meanwhile, Google just unveiled its mobile payment service dubbed Android Pay that will compete with Apple Pay and Samsung Pay, a service announced over the weekend at the Mobile World Congress in Barcelona. Like Apple and Samsung’s versions, Android Pay relay on near-field communications, or NFC, which uses an embedded chip to talk with compatible registers.
Unlike Apple and Samsung’s services, Android Pay will not be a separate payment app. It is will serve as a platform that enables developers to integrate mobile payments into their apps using an API layer. That basically means that it will function as a platform for third-party store and payment apps. The credit card information of Android Pay users will be stored locally, which means that transactiosn can occur without a data connection.
As a security measure, Android Pay will use “tokenized” card numbers. That’s a one-time credit card number which will be generated for each transaction. Later on, Android Pay will utilize biometric functions, such as fingerprint scanning, which can be used by Apple Pay customers in some of the latest iOS devices.
Mobile payment functionality has been available for the past couple of years, but consumers have mostly shunned such digital transactions — at least until Apple gave the new industry a huge boost with the ntroduction of Apple Pay in late 2014. Apple Pay allows consumers to make credit card purchases with an iPhone 6 or iPhone 6 Plus. Just a few days after its launch, 1 million credit cards had been used on the Apple Pay service.
The Internet search giant’s Google Wallet — one of the early incarnations of mobile payments — will remain a separate service. But eventually it will rely on the Android Pay framework. Launched in 2011, Google Wallet failed to gain much consumer attention, primarily because it seemed too complex for everyday use and carriers blocked it from being used when it launched.