Exciting articles several times a month
28 July 2017
Unlike other mobile app categories, the market for mobile payment apps is continuously changing. Many giants have entered the mobile payment solutions with the urge of dominating others. Some of them have vanished from the scene, while others are leading the league. Payment apps or mobile wallets are supposed to make it easy to pay for stuff, or at least let you pay off your lunch, when your wallet is left or forgotten.
Changes in consumer life styles have been tremendous and these are still evolving. From carrying cash to credit cards, now it is just mobile wallets and payment apps. Users’ wallets are no longer heavy, and they do not have to hold on to them anymore. So in this article we are listing top innovative mobile payment apps that are aiming to ease your transaction activities. These apps are designed for smartphones and tablets that run on platforms like Android and iOS.
Functionalities. Apple Pay is the payment feature of the Apple Wallet. The Wallet (the app was called Passbook) is a standard app installed on the phone in which all payment cards and loyalty cards can be stored. Apple Pay enables users to pay in certain stores using an iPhone 7, iPhone 7 Plus or Apple Watch (all have a built-in NFC chip), and, definitely, it can be accessed on the latest versions of the iPad.
Apple Pay is currently available in the United States, United Kingdom, Canada, Australia and China (in Canada and Australia only in conjunction with American Express). In 2016, Apple launched a new person-to-person payment functionality, which enables direct funds transfers between Apple Pay users.
Security. Apple Pay is relatively secure, especially compared with “regular” credit card transactions. When a new credit or debit card is linked to the device, Apple checks whether that card can be authorized. The data is sent to the issuing bank, which determines whether the card can be linked. Under certain conditions, the bank may carry out additional checks. In this case, banks are responsible for providing secure authentication methods.
Rather than storing the actual card number, when a card is linked to an iPhone, a token is created, known as the Device Account Number (DAN). This number is stored in the Secure Element in the user’s iPhone, after which only that iPhone can decipher the token.
Apple does not store any personal transaction information, and only the most recent transactions are displayed in the wallet. In addition, if Location Services is switched on, Apple may receive anonymized time and location information on POS transactions. In case of in-app transactions, Apple stores anonymized transaction information (such as the approximate amount). If an iPhone with Apple Pay installed is stolen, Apple Pay can be turned off remotely using the “Find My iPhone” app.
Payments can be made by entering a PIN number or using Touch ID. It is difficult to fool the sensor with a fake fingerprint, which makes it unlikely that this type of fraud will be used often.
Business model. Apple charges a percentage of the interchange fee received by issuing banks. It is thought that issuing banks in the United States pay approximately 0.15-0.25% of the total transaction value to Apple. It may be that these banks are willing to do this because payments via Apple Pay are more secure than regular credit card payments, which means the banks lose less money to fraud. Regulations in Europe mean that the interchange fees are much lower than in the United States. Accordingly, in the United Kingdom, Apple uses Apple Pay more as a means of selling additional devices than making money on the transactions themselves.
Functionalities. PayPal mobile app does not currently support NFC, but PayPal has announced that this functionality will be added later this year for customers in the US and Australia – although only for the Android version of the app. This functionality comes on top of the existing remote payment functionalities. The app can be used to make payments from a linked bank account, credit card and PayPal credit balance.
Security. At present, logging in to the PayPal app involves using an email address and password. It is unclear whether different (faster) authentication methods will be introduced, when NFC becomes available. No personal information is shared when the app is used for payment.
Business model. Payments to retailers are free for consumers, except where a currency exchange is involved. Business customers pay a fee per transaction. Transferring money to other consumers is free on condition that a bank account or PayPal credit balance is used. If the underlying payment method is a credit card, however, a fee is levied.
Functionalities. Android Pay is the successor to Google Wallet for point-of-sale and in-app payments. Android Pay can be used with Android devices running the KitKat operating system (Version 4) with an NFC chip. It can also be used to pay with loyalty points.
Security. Once a user links a credit or debit card to the Android device, payments can be made by first unlocking the phone and then holding it close to a contactless payment terminal. Smart Lock (Android 5.0 or higher) enables the user to set up the phone so that under certain conditions it remains unlocked.
Android Pay uses HCE and tokenization based on MasterCard and Visa standards. Card details are not stored on the device, but in the cloud, where tokens are generated. To enable payments to be made when the device is not connected to the Internet, a limited number of tokens are stored on the device (though it is not clear precisely where).
In the event of loss or theft of the mobile device, customers can use Android Device Manager to lock Android Pay remotely, secure it with a new password or delete all personal information. The “Find My Phone” functionality can also be used to trace the location of the device using Google Maps. To make a payment, the user must unlock the device, if it is locked. Depending on the type of a device, this can be done by entering a PIN number, a pattern or a biometric feature (face recognition or fingerprint).
Business model. Google will not receive any fees from banks, retailers, consumers or any other party for transactions effected using Android Pay. The business model appears to be based more on offering coupons, rewards and loyalty points via Android Pay.
Functionalities. Samsung Pay can be used with the Samsung Galaxy S8, Samsung Galaxy S8 Plus or Note5. Samsung Pay uses NFC technology, but can also use barcodes and Magnetic Secure Transmission (MST). MST mimics the magnetic strip on a traditional payment card by causing the mobile device to generate a small magnetic field. This means that Samsung Pay works both with new NFC payment terminals and with older terminals with magnetic strip readers. Samsung Pay does not work on terminals that require the payment card to be inserted in order to read the EMV chip. Up to ten payments can be made without a working Internet connection.
The user goes through a series of steps to perform a transaction. He or she swipes to launch the app, selects the appropriate payment card and either uses the fingerprint scanner for identification or enters a PIN number. The mobile device is then held against the payment terminal to make payment.
Security. In order to link a card, the card is either scanned or the details are entered manually. Depending on the card issuer, it may also be necessary to enter a one-time password, which is sent to the user by text message or email.
The number of the card that is stored in Samsung Pay is not shared with a vendor. Instead, Samsung Pay transmits a one-time digital card number. Samsung Pay is also secured with Samsung KNOX. Activating this application and entering the password takes the user to a secure environment that Samsung calls a container. In effect, therefore, Samsung KNOX creates a work and a personal segment on the same device.
If the phone is stolen, a user can lock and reformat the device using the Samsung “Find My Mobile” app. Authentication is achieved using a fingerprint or PIN number after unlocking the phone.
Business model. Samsung does not charge banks a fee for transactions performed using Samsung Pay. Samsung thus appears to be focusing on rapidly acquiring a large market share.
Functionalities. Alibaba Group launched Alipay Wallet app in 2013. The name of the app was changed in July 2015 to Alipay 9.0. The wallet is only available to Chinese customers, but its innovative functionalities mean it is interesting to look briefly at this wallet.
The wallet is available for Android devices and iPhone. A credit card can be added to the wallet (China CITIC Bank, VISA and MasterCard), debit cards issued by Chinese banks, discount vouchers and loyalty cards. The wallet can be used to make payments, share bills, buy goods and services via links to other apps (in-app payments).
Alipay 9.0 offers new functionalities through its collaboration with Koubei. For example, the wallet can now be used to select a local restaurant, share information about stores and sales, receive discounts and pay bills. It is also possible to pay for and keep track of government services, e.g. viewing the status of a passport application or paying motoring fines. Peer-to-peer payments are now also possible. In the latest version (9.2), Alipay has taken the lead by adding social network functionality to its payment app.
Several technologies can be used to make payments: NFC (contactless), sound waves, barcode or QR code. The advantage of paying by sound waves is that this technology works even in situations where there is no 3G, 4G or Wi-Fi signal, for example in metro stations. Similarly to QR code, payments can also be made whilst the device is off-line.
Security. A card can be added to the app by entering the card number or taking a photograph of it, choosing the bank from a list and giving it a name. Following the upgrade of the wallet to version 9, questions were raised about security of data, because it is no longer necessary to enter a password in order to open the app. According to Ant Financial, this is unnecessary because access to the payment app on the mobile device itself is already secured. That said, the commotion in the media is likely to result in a security update. Users can block their account by contacting Alipay customer services.
To ensure that mobile payments are secure, Alipay is developing a number of biometric identification features, such as face recognition. Alipay is also working in partnership with Chinese telephone manufacturer Huawei to facilitate fingerprint authentication. iPhone users can pay using TouchID. Jack Ma, the owner of Alibaba, demonstrated a new identification technique in 2015 that his company is developing, which involves facial scanning when making payments.
Business model. The functionalities of the Alipay Wallet are very extensive, and have been greatly increased by addition of social networking functions. It is up to the wallet manufacturer to strike a balance between security considerations and the ambition to create a platform that combines social, entertainment and financial applications. The wallet has a huge reach in China, with 270 million users. Alipay does not appear to have plans to expand the wallet to other countries. It remains a local product.
Canada, UK, and several other European countries are battling to make mobile payment transactions possible. For now, US actively support the service – Google Wallet and Apple Pay are still the leading players. Mobile payment is going to start revolutionize — as soon as device makers start supporting NFC, marketers adopt it, and users become well equipped with NFC and Bluetooth.
Exciting articles several times a month