Apple Pay vs. Google Pay vs. Samsung Pay: The Digital Wallet War

The battle over mobile payments is heating up, with three of the biggest tech companies preparing to duke it out with competing services.

Apple Pay competition intro
Source: Apple

The latest salvo was fired on June 8 at WWDC 2015 when Apple (AAPL) announced new credit card and retail partners, four times growth since launch for Apple Pay and the renaming of its iOS Passbook app to Wallet.

A few weeks prior, Google (GOOG,GOOGL) introduced Android Pay, a new mobile payment platform that supports Google Wallet and will run on seven out of 10 existing Android devices.

Complicating Google’s plans, Samsung (SSNLF) currently accounts for four out of 10 Android smartphones in use worldwide — despite having a bad year in 2014 — a number that is probably higher in the U.S. and other mobile payment target markets. And, Samsung announced its own mobile payment ambitions in March, with Samsung Pay launching this summer…

What’s the difference between these mobile payment schemes, and which one are you likely to end up using? Here’s what you need to know about Apple Pay, Android Pay and Samsung Pay.

Apple Pay

Apple Pay was announced in September 2014. Despite a few initial road bumps around fraud issues, Apple’s mobile payment system is growing fast.

Apple Pay
Source: Apple

At WWDC, Apple announced that Apple Pay is now supported by four times the number of retailers since launch. Further, with news Discover (DFS) will be supporting Apple Pay, this mobile payment system now works with all major credit cards, including MasterCard (MA), Visa (V) and American Express (AXP). Expansion beyond the U.S begins with a UK rollout slated for July.

Wallet — the iOS app formerly known as Passbook — is now a big part of Apple Pay, serving as the central location for credit card and loyalty card info, as well as coupons, passes and tickets.

  • Compatible with the iPhone 6, iPad (online only) and Apple Watch
  • Requires NFC payment terminal
  • Supported by all major credit cards and 2,500+ financial institutions
  • 700,000+ retail locations
  • Fee of 0.15% of transaction paid to Apple for credit cards, 0.5% for debit cards; no transaction fee for consumers

Android Pay

Google has already taken a crack at mobile payment domination with Google Wallet, but uptake has been limited.

Apple pay vs Android Pay

Android Pay, announced at Google I/O 2015, won’t be a replacement for Google Wallet when it arrives later in 2015, but rather an underlying software platform built to support secure digital transactions. Naturally, Google Wallet will be supported.

Google bought assets from Softcard — a mobile payment app that wireless carriers had been backing — baked some of the technology into Android Pay, and as a result has agreements in place to pre-load Google Wallet on Android smartphones sold by the carriers.

Android Pay lets other mobile wallet apps embed payment functionality that takes advantage of this secure technology, so even if Android users don’t use Google Wallet to pay for purchases, they may still be using Android Pay.

  • Compatible with NFC-enabled Android smartphones running KitKat or higher
  • Requires NFC payment terminal
  • Will be supported by the four major credit cards (Discover, MasterCard, Visa and American Express) at launch, currently has six U.S. banks signed up
  • Will be accepted at “hundreds of thousands” of stores at launch
  • Google charges no consumer or retailer transaction fees for Android Pay

Samsung Pay

Finally, we have Samsung Pay, the mobile payment system for Samsung smartphones that launches this summer.

Apple Pay vs Samsung Pay
Source: Samsung

On the surface, Samsung Pay closely resembles Apple Pay. It’s proprietary, takes advantage of built-in fingerprint scanners on supported smartphones for enhanced security and lets users tap to pay at retailers with NFC terminals.

Where Samsung Pay has a distinct advantage over Apple Pay and Android Pay is its unique ability to also work with standard magnetic card reading terminals. Thanks to Samsung’s purchase of LoopPay, and a special chip in the new Galaxy S6, Samsung Pay can be used at 90% of existing POS terminals, instead of just the 300,000 retail locations in the U.S. equipped with advanced NFC credit card terminals.

  • When it launches this summer (U.S. and South Korea), Samsung Pay will be compatible with Galaxy S6 and Galaxy S6 Edge
  • Works with NFC and standard magnetic strip terminals
  • Will be supported by MasterCard, Visa and American Express at launch, along with several large U.S. banks
  • Will be accepted at most credit card-supporting retailers at launch
  • Samsung charges no consumer or retailer transaction fees for Samsung Pay

Apple Pay, Android Pay or Samsung Pay: Who’s Going to Win?

Apple Pay has a big lead at the moment, but there are several factors working against it.

Apple Pay competition conclusion

First, it’s proprietary. Apple Pay market share can never expand beyond iPhone market share so it’s pre-destined to be eclipsed by Android Pay. Apple is also alone among the three competing mobile payment systems in charging retailers for transactions, something that will eventually cause pushback.

Samsung Pay has a huge advantage in the sheer number of retailers who can accept it with their current POS terminals, but that is tempered by the fact that the magnetic stripe technology is exclusive to the Galaxy S6 and Galaxy S6 Edge. That will be short-lived, though (at least in the U.S.), since retailers are being required to switch from magnetic stripe to more secure pin and chip terminals — which also incorporate NFC capability.

Android Pay has the advantage of a massive potential user base.

Android smartphones make up over 80% of the market (although not all those will be running a supported version of Android). Retailers and financial institutions like Android Pay because of the large number of potential users and the lack of transaction fees. Perhaps more importantly, most U.S. wireless carriers have signed agreements with Google to pre-install Android Pay and Google Wallet on smartphones.

When the dust settles, I suspect we’ll end up with two competing mobile wallets that fall right along the mobile platform lines: Android Pay and Apple Pay. Android Pay will dominate, but Apple Pay will continue to be a presence, especially in the U.S. where iPhone market share is much higher than it is worldwide. Samsung Pay is a tougher call, but despite having an initial advantage in retailer compatibility, it seems likely to eventually lose out to Android Pay — especially with carriers pre-installing Android Pay and Google Wallet on Samsung smartphones.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.


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