Android Pay brings a fresh impetus for mobile payments

Travelmole’s Ray Montgomery looks at the evolving landscape of mobile payments as Android Pay enters the fray.

In a separate post I recently touched upon the different travel habits of iOS and Android users, which offered some interesting insights into mobile booking behavior for each, from average expenditure to destination of choice. What is perhaps less clear is how the respective mobile wallets of Apple and Google are going to differentiate themselves. On first look, there seems little to separate the all-new Android Pay from Apple Pay.

Although Google is playing catch up, it has a potentially much bigger customer market – the near field communication (NFC) powered Android Pay app can work with Android 4.4 (KitKat) and above as opposed to Apple’s iPhone 6 and 6 Plus. In short Google claims ‘7 out of 10 phones’ will run Android Pay. Furthermore new devices being launched by AT&T, Verizon, and T-Mobile will have Android Pay pre-installed.

Apple Pay’s upcoming launch in the UK still gives it an edge globally, whereas it is still early days for Android Pay in the US market.

The very obvious distinction between the two is the different interfaces – iOS and Android, and the respective mobile wallet capabilities are unlikely to be top of mind when choosing to invest in an iPhone or a handset running Android. One thing that may shift the balance is the level of payment security. Both use tokenization, which entails sending a one-time ‘token’ to the merchant instead of encrypted card numbers. So in theory if this were to be intercepted by a hacker, it would be useless to him as it bears no relation to a card transaction.

However there is one subtle difference in how this currently works in practice.

One touch biometric v password authentication

I mentioned the market is stacked in Android’s favour, with more devices able to use Android Pay. On the face of it, this is true, however Apple is still ahead by some margin with the availability of fingerprint scan authentication. Most Android phones currently in use don’t have this function and require a traditional password to initiate a payment which we all know is not the most secure method. Undoubtedly biometric readers, from fingerprint to iris scans, will scale up over time on the upcoming ‘Android M’ platform, but for the time being iPhone 6 and 6 Plus has the edge.

In conclusion, the use of NFC on both platforms means contactless payments can usually be made in the same brick and mortar stores as Android Pay is now enabled at about 700,000 locations in the US. Users are probably unlikely to switch platforms in the short term but for Android Pay there is an added complication.

The not inconsiderable number of Samsung users (an Android Pay target market) will soon have access to the stand alone Samsung Pay mobile wallet which works very differently from its two main rivals. Due for a September launch in the US, it utilizes Magnetic Secure Transmissions (MST) which simply means users wave their smartphone over a traditional credit card swipe reader to make a payment without the need for retailers to install NFC terminals. It also uses a form of tokenization for added security, while being compatible with virtually every location that accepts credit and debit card payments.