In this latest installment of ‘Rantings with Ranta,’ we continue down the mobile path and discuss who might come out on top in this game (and just like, tee-ball, there doesn’t have to be just one winner).
What do you make of this week’s news from MWC around Android Pay?
They appear to have built the bridge to the future.
Okay, I’m intrigued, please expand.
What they’ve announced is a very smart 2-pronged approach to the mobile payment. The first prong of the battle plan is to leverage the LoopPay technology. That technology, as we have discussed, leverages the current (albeit dated) mag stripe technology that card payments in the US rely on today. This approach gives consumers “mobile” access to more than 90% of all POS terminals in the US (if we are to take Samsung/LoopPay at their word).
The second prong is the announcement that they are also planning to utilize NFC technology. In theory, LoopPay allows a mobile user to never have to put a phone back in a pocket to swap out for a plastic card (which is the case today with Apple Pay). This goes back to the bridge theme–building the bridge between the current ecosystem and the future landscape. In other words, it’s like having your chocolate and your peanut butter, or your great taste AND less filling.
Sounds delicious, when you put it that way. So Android Pay looks to be a much vaster (at least in the near-term) option than Apple Pay, right?
Apple Pay today only works at NFC-enabled terminals that actually accept Apple Pay…remember, not all NFC-enabled terminals have the ability to accept it (due to agreements with merchants and POS providers, etc.). Samsung Pay (thanks to Loop) will be accepted much more broadly, closer to universally (in the US).
And let’s not forget Google. First, collectively there are more Google/Android and Samsung users than there are iPhone 6 users. Second, I can imagine that if alliances are to happen, Google would naturally pair up with the device provider running its OS.
Okay, so that paints an interesting picture when it comes the handset theater. Tell me more about PayPay (I mean PayPal), as the company’s making waves with its Paydient acquisition?
PayPay wouldn’t be a bad re-brand, but I can’t see Mr. Icahn approving it.
I like the way you phrased that, the Handset Theater. If we shift our focus to the other part of the war map, because you are right the handset is not the only battle, we need to talk about the looming handset-agnostic battle as well. Paydient had a very bright future—tying payment to loyalty and offers more so than other providers. Its acquisition by PayPal brings more credibility to its offering, based on PayPal’s pedigree and footprint. PayPal can now quickly join the mobile wallet fray by leveraging their newest asset.
How viable a competitor do you think they (PayPal) will be?
Honestly, I think they’ll remain a tertiary party for now primarily just due to the titanic size of the more dominant players. I think they will bring great thoughts and ideas to the battles, which will help the industry and push the needle. I expect them to be a very active participant in the discussion over the next few years, but if you pushed me to pick a winner between them and Google, I would be hard pressed to do that.
Who else is part of this handset-agnostic battle?
To throw out a few names: Amazon, the aforementioned Google (on multiple fronts), the various card networks and the banks. Each of these behemoths is going to play a major roll either backing different players or emerging as bigger players themselves on the board.
Which of these has the upper hand? Google?
Google has the upper hand in terms of war chest and flexibility. Banks and the card networks, at the end of the day, still own what makes this all work. Without them, we can’t make the leap into a truly mobile-only (or mobile-first) world. Without them, there are no players and no board game. I think they are players that will have the most to say before this game is settled.
And what about the merchants?
The merchants were probably quickest to jump into the mobile world to help meet their omni-channel experience expectations. The CurrentC application has been relatively quiet, albeit with a few announcements here and there—most notably that they will accept credit card branded wallet NFC payments, but for the most part, the beginning stages of battle have seen them rather quiet.
The established mobile apps for single purpose like Starbucks and Dunkin Donuts keep chugging along and may never be taken over by these warring factions. I think consumers have latched on to these offerings and you’d be hard pressed to get some of them to give it up; they are earning too much free java already. I think these apps will likely remain neutral, a la the Swiss.
Do you think the merchants will be Apple Pay/NFC-enabled in the next couple of years or do you think they might wait it out?
I think you are going to see more and more pressure on the merchants to accept all of these options, especially when you think about the EMV shift when consumers are going to be forced to give up their beloved swipe.
The key for the merchants is tying the loyalty piece together with the payment. If they can beat the big wallet players to that point, the consumer preference may side with them because they would be there first. But if you think about it, what stores do you know of that only accept one form of payment or one card network? It’s limited and usually tied to some agreement the store made with a card branding opportunity. What we are talking about is more or less the same thing—the merchant would be limiting the consumer to the merchant’s preference, and I can’t see that strategy winning.
Will there be an eventual handset victor?
No, there can’t be. There are just too many options, each of which is viable and worthy. And who’s to say that Huawei or Xiaomi won’t enter into the fray in the next couple of years? Everything will ultimately come down to consumer preference and comfort level. Just look at the market 10-15 years ago; the dominant players were Nokia and Ericson, so what’s to say we won’t see another shift in consumer preference over the next 10-15 years.
I’m looking forward to this game. I’ll bring the peanut butter cups.
I’ll bring the popcorn.
ACI Enterprise Payments Platform 
