A Tale of How Google Might Leapfrog Apple

by Tim Sloane 0

This opinion piece by Mark Sullivan published in VentureBeat suggests that Google may leapfrog Apple:

“A number of signs point toward Google unveiling a broad new mobile payments platform called Android Pay at its I/O developer conference Thursday in San Francisco. The platform is likely to integrate tightly with Google’s Android mobile operating system, and may exceed the functionality of its chief rival, Apple Pay, in some ways.
Google’s first stab at mobile payments, Google Wallet, was plagued with all kinds of problems. Merchants never really bought into it, and phone carriers prevented the technology from getting onto a lot of phones. Consumers found the experience a little bit clunky.
But Google has done some smart things in the past year, driven at least in part by Apple Pay’s initial success.”

The opinion piece identifies the acquisition of Softcard as delivering the cooperation of mobile carriers and providing loyalty components:

“Google also got some advanced mobile payments technology in the deal. Softcard, it turns out, had done a lot of work on how to handle loyalty programs through a mobile payments platform. It had developed a set of specs, and even worked to convince the point-of-sale equipment manufacturers to adopt the specs.”

While finding a path through the roadblocks that mobile carriers created is indeed a major step forward, the loyalty aspect is a different issue. This opinion piece mentions this New York Times article that investigates how Apple and Google are in a race to deploy loyalty and rewards technology. These technologies however are entering the market at a time when merchant’s are least likely to deploy any other new technology because they are already overwhelmed with EMV, NFC, Apple Pay, debt acceptance, and the fast approaching holiday season. As an example, this statement made in re/code by Brian Cornell the CEO of Target.

The article also identified that Google would be implementing fingerprint recognition capabilities as a OS component, which will improve security and the overall operation of fingerprint reading, although accuracy and speed are very much tied to the fingerprint hardware, which remains outside of Google’s control.

The conclusion of the article is a tad more conservative that the title of

“Google may be set to leapfrog Apple in mobile payments with Android Pay”:

“By bringing in the ease of the fingerprint reader, and integrating the rewards card, Google will have removed several friction points from the mobile payment process. And it will have one-upped Apple, at least for the time being.
Tomorrow morning at Google I/O we may see all these different pieces — the Softcard technology, fingerprint support in Android, Google Wallet, and the NFC chip — come together in one coherent and compelling mobile payments story under the name “Android Pay.”

If that happens, I expect to see a lot more phones shipping with Android Pay baked in, and a lot more Android phones with fingerprint readers built on.
Since there are more Android phones in the wild than Apple ones, well, let’s just say things could get interesting in the mobile payments space.”

Not discussed here is the question of how Google will drive banks to participate with anywhere the same enthusiasm as was shown with Apple Pay, where banks were taking out full page ads urging iPhone 6 users to download Apple Pay. Unlike Apple Pay, Google wallet was designed to disintermediate banks through a pooled account. If Google hasn’t corrected that error, banks are unlikely to recommend Google Pay to its customers.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

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