Apple Pay Research 2 of 2

Curated information on the difference between Apple Pay and Google Wallet

Google Wallet vs. Apple Pay – Comparison
“Having a partner like Apple really was like catching lightning in a bottle,” Jim McCarthy, head of innovation at Visa, said in a phone interview. “Given their ability to effectively manage their platform, and get folks across multiple industries, merchants, banks and networks to cooperate really was the thing that catalyzed the whole thing.”

1) Google stores information on ALL of your purchases made on Google Wallet. Doing this, it set itself up in competition with the banks. Banks needed a separate network connection to do the CC validation back to google servers. When you purchase something using Google Wallet NFC the vendor charges Google who then in turn charges your credit card. There is no direct connection between the purchase and your credit card. This prevents cashback bonuses from always working.

Apple’s payment model continued to put banks “at the centre of payments” by not storing any information about your purchases. in fact, banks advertised Apple Pay so that customers with multiple cards can choose theirs as default.

The search giant pays such hefty fees to banks that it loses money on each transaction. That’s made the division something of a money pit.
Apple Goal in entering the payments industry is to increase the value of Apple hardware. Touch ID, location data, NFC and secure element mitigated some risk and so is more secure. Apple gets around 10% discount on the processing rate it will pay.

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Google’s view is that if the PIN is stored in the SE component the banks will take full responsibility over the PIN. Apple mitigated risk for banks by using SE and encrypting card info.
2) Google tried to eliminate Visa, MasterCard by generating its own credit card number to scramble bank’s cc numbers. “There are schemes that don’t respect and honor the payment networks,” said James Anderson, the senior vice president for mobile product development at MasterCard. “We want to invest in programs that respect our role in the ecosystem.
3) No network is needed for paying from ApplePay. the POS device is connected to the network so all the iPhone has to do is send the token and CVV via NFC. After that the POS uses its own network to validate everything. The only time a cellular/wifi network is needed is when the card is first linked to the phone.

Carrier blocking
Android OEMs are still far more susceptible to carrier control, as they still require carrier approval for software updates. Meanwhile, Apple is able to distribute software updates independently of carriers, and is generally capable of operating outside of their jurisdiction.

Approach and execution
1) advertising supported model.
2) SE is debatable
US only. Same with Canada, Australia. Google can’t just go to countries that have the infrastructure

Google launched Wallet in Oct 11 in US only with limited number of phones. They did not fix these problems. Apple waited until it can secure favorable terms with the banks, retailers, and processors, as well training users with the TouchID fingerprint sensor, then hype the service and go for the kill. While Apple isn’t necessarily inventing the wheel here, Apple Pay again represents the first real implementation, on a massive scale no less, of the relatively fresh tokenization specification.

What does it mean for the industry

It’ll be a lot easier to convince the financial institutions now that Apple is finally onboard for NFC payments if they have a similar offering of security and data privacy. Apple’s adoption of NFC signals that interoperability is a key component of the ecosystem moving forward, but it also probably means we’re going to see significant morphing of the existing networks around the shift to mobile. Those shifts will be:

  • Move away from card numbers to tokenized identity as the customer identifier (no more “cardholder” folks)
  • Card networks become data networks – the data passing before, during and after a transaction becomes just as important as the authorization itself; and
  • When we move to cardless ubiquity, do card networks just become payment networks with payment and identity protocols?Benefit- advantage, profit

Tokenization vs provisioning- Apple vs google – approach on wallets

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