“Cowries, Cash & Credit – The History and Future of Payment Processing” Series 3 of 4

The History (and Future) of Payment Processing – Part 3

For centuries, humans have been inventing, improving and implementing processes for trade and payments.  We have come a long way from the days of bartering.  In fact, we’ve come a long way in the past 40 years.  More and more, individuals are carrying debit and credit cards and forgoing cash.  While it is more convenient, there are a lot of risks for both the consumer and the merchants.  As we continue advancing payment processes to on-line and mobile options, it’s important to understand the choices and revel in the fact that just five years ago, these opportunities weren’t even a thought.

What is happening in the world of payment processing now?  There are three big inventions in which merchants and consumers alike should take note. 

Apple Pay

Apple is aiming to replace the wallet with Apple Pay.  Apple Pay is Apple's new mobile payments service.  

Introduced in October 2014, Apple Pay is designed to allow iPhone 6 and 6 Plus users in the United States to make payments for goods and services with their iPhones, both in stores and within participating apps, using an NFC chip built into the iPhone 6, the iPhone 6 Plus, and the upcoming Apple Watch.

How does it work?

You must set up Apple Pay, by installing  iOS 8.1and setting up your Apple Passbook.   Once a credit or debit card has been added to your Passbook, Apple Pay is ready to be used in stores and in apps.

In a retail store, when approaching a point-of-sale system compatible with Apple Pay, the screen of the iPhone 6 or 6 Plus will light up and open Passbook automatically, where a user can tap on a credit card to be used or pay with the default card.

A payment is made by holding an iPhone 6 or 6 Plus near a checkout system that includes NFC, most of which look like standard card checkout terminals within stores. A finger registered with Touch ID must be kept on the home button for a short amount of time, after which a payment is authenticated and the transaction is completed. A completed payment is denoted by a slight vibration, a check mark on the screen, and a beep.

To keep transactions secure, Apple uses a method known as "tokenization," preventing actual credit card numbers from being sent over the air. Apple also secures payments using Touch ID in the iPhone 6, iPhone 6 Plus, iPad Air 2, and iPad mini 3.   

And don’t forget about the Apple Watch!  It uses continual skin contact to ensure payments are secure.

Google Wallet

With Google Wallet, you can forget about carrying plastic cards with you at all times. With a simple swipe on your smartphone, the virtual wallet stores your card information and makes it easier to shop online and in stores.

Launched in 2011, Google's payment solution not only makes shopping more efficient, but also allows you to send money to others, take advantage of loyalty programs and more.

To sign up for Google Wallet, you'll need to have a Google account. If you already have a Google account, you can go ahead and add Google Wallet by using your existing name and password. On wallet.google.com, click “Sign In” in the top right corner.

Then, set up your Google Wallet by entering your personal and billing information, and click “Accept and create.”

Verifying your identity will allow you to access certain features online at wallet.google.com and on the app. These features include activating a free Google Wallet Card with 24/7 fraud monitoring and receiving notifications. Google asks for this information because “financial regulations require that payment providers take steps to verify their customers' identities.”

Your Google Wallet balance is the money stored in your virtual wallet. With this balance, you can send money to others, shop online and make in-store purchases with your Google Wallet Card.

You can add money to your balance from your bank account for free, but to add money from your credit or debit card, there is a flat 2.9% fee.

To use your Google Wallet to make online purchases, just look for the “Buy with Google” button on apps when you checkout. Popular sites that offer this are 1-800 Flowers, Five Guys, Domino's Pizza, Uber, Toys “R” Us and more. You can also buy from Google Play, Drive, YouTube and other Google properties.

Samsung Pay

Samsung rolled out its Apple Pay response when it unveiled its latest Galaxy smartphones. However, Samsung Pay differs in several key ways from both Apple Pay and Google Wallet.

Powered by the technology it acquired when it bought LoopPay in February 2015, Samsung Pay allows for the same near field communication transactions (NFC) as Google Wallet and Apple Pay. However, Samsung Pay also allows Samsung smartphone Galaxy S6 and S6 Edge users to pay for goods and services through the more ubiquitous magnetic strip payment processing terminals. And since such magnetic strip terminals make up nine of every 10 point of sale terminals, Samsung Pay will enjoy a significant advantage in terms of immediate usability over either Apple Pay or Google Wallet.

The rivalry between Apple Pay, Google Wallet and Samsung Pay essentially ends with a consumer's smartphone purchase decision. Certainly one service's features could help tip the scale of whether a given consumer in the U.S. buys an iPhone or a Galaxy S6 or other Android-based smartphone. It's worth briefly noting that Google Wallet does have an iOS app. However, given the overwhelming popularity of Apple and Samsung Pay, we will more than likely being seeing some updates to the Google Wallet product soon.

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Mobile payments are the future, like it or not. So while this budding space continues to take shape, it’s important to keep educated on all services that can be added to the mobile service provider you choose.

The fourth and final part of the “Cowries, Cash & Credit – The History and Future of Payment Processing” series, we take a look at the future of payment processing – CurrentC, Stratos and EMV.

If you have questions about the services Chosen Payments provides or you have a topic you would like to see covered in my blog, feel free to reach out!  

Zach Allen Regional Vice President at Chosen Payments
Credit Card Processing | ACH | Gift/ Loyalty Cards | Mobile & Ecommerce Payments | ATM
Toll Free: 1.855.424.6736 x. 116
zach.allen@chosenpayments.com  |  www.ChosenPayments.com 
www.facebook.com/ChosenPayments  |  Twitter: @ChosenPayments 
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