To Win, Payment Companies Need to Blend Mobile and Brick and Mortar

The line between in-store and in-app payments is blurring and the channels are not as distinct as they used to be.

In this environment, all of the major players in payments are pursuing both channels. I can use my mobile to make a payment on a merchant website using an Apple Pay token. But, if I’m standing in the merchant’s ‘bricks & mortar’ store, I can use that token (or one from Android Pay, Samsung Pay or within my bank’s mobile app) to tap on the point of sale. PayPal is spreading from online to in-store. Apple and Google are moving from in-store to online. As the battlefield gets broader, the prize is getting bigger.

How are companies building a presence in both in-app and in-store payments?

Apple owns the hardware and the OS, and its relationships with card schemes and banks (at least in the US) seem to be in place already. Once enough EMV/NFC terminals roll out to make it a go-to payment method, Apple Pay will be a force to be reckoned with. With launches in more countries predicted soon (countries with much larger acceptance infrastructures) we can anticipate impressive usage statistics in the next 12-18 months.

Samsung Pay looks very similar – EMV, tokenization, NFC, eSE and fingerprint authentication – but with a twist that could have a real impact. The integration of MST, the magnetic stripe, tap solution from LoopPay. This may be a short-term, one-market play but it’ll give them significant bragging rights in the “my transaction volume is bigger than yours” debate.

Samsung doesn’t own its OS, so where does Android and perhaps more importantly, Google, fit in? The search giant added its own twist with the acquisition of tech from Softcard, killing a competitor and getting Google Wallet preinstalled on devices from AT&T, T-Mobile and Verizon in the process. Well played. Again a U.S.-only move for market share, but the big players seem so keen to dominate this important market that they’ll make multi-million dollar acquisitions to get our American friends tapping.

Another major player, PayPal acquired Paydiant, one of the major tech vendors involved with MCX. This gives PayPal a brandable mobile wallet with loyalty integration.

Google also shared a teaser about “Android Pay”, an API that will allow third party developers to launch innovative payment schemes by leveraging host card emulation (HCE). Google Wallet won’t die (allegedly) but will be integrated with Android Pay. Google also claims that they won’t compete with Samsung and will look to bring the technologies together. Keep an eye on the formal launch at the developer conference in May.

On top of this, the card schemes are placing their bets, but they’re not gambling. They’re supporting pretty much all of the above. And what about the banks? Well, since Apple dominates its ecosystem, they’ll have to fall in line for iPhone access, but for Android, they can maintain control and seem intent on doing so. Both Visa and MasterCard are reporting multiple HCE-based launches planned for this year, with Visa saying seven will become thirty by year end. MasterCard has also reported projects in 15 countries.

Martin Cox is Global Head of Sales at Bell ID.