Mobile payment is the next big battleground for the major tech firms, with Google set to lock horns with Apple when it launches its Android Pay service later this year (likely at Google I/O in May) having announced earlier this week that it has acquired “some exciting technology and intellectual property” from Softcard. As part of the same announcement, Google revealed that it has signed deals in the US with AT&T, T-Mobile and Verizon to pre-load all android mobiles they sell with the revamped Google Wallet.
A bite of the Apple
Apple had previously stolen a march on its great rival by introducing its own Apple Pay system to US customers in October last year.
Apple Pay aims to replace physical wallets by letting you store your card details on your smartphone. This can then be used to make contactless payments at terminals in shops where it is authorised at point of sale by the user’s fingerprint. The system is set to be rolled out across Europe in the coming months.
Although still in its infancy, the rise of Apple Pay has been astonishing. Tim Cook announced during Apple’s earning call for Q1 2015 that Apply Pay now accounts for $2 out of every $3 spent with contactless payments in the US.
Fears for the incumbents
With reports that Samsung plans to get in on the act with its own mobile payment system, it appears that this fight will not be a California-only affair and it seems unlikely that Samsung will be the last entrant to this new market.
The arrival of the the tech giants in the physical payment space will have far-reaching consequences across various sectors, not least for the banks and payment card providers, who previously had this market sewn up. Despite managing to effectively control previous attempts by tech companies to enter this space by requiring contactless payment systems to use secure elements embedded on SIM cards, this new concerted effort by the mights of Apple and Google seems to have changed the landscape.
Advertising to shoppers
In addition to the above, there are also likely to be repercussions for adtech, given the potentially enormous concentration of additional shopper data in the hands of what are already big-data businesses.
Apple has explicitly stated that it will not collect user data such as purchase histories, amid concerns over privacy and security.
But even generic, fully anonymised data can be useful to marketers, and of course we don’t at this stage know whether other entrants into the contactless market will maintain the same policies.
The additional key difference is that technology players such as Apple and Samsung are primarily hardware manufacturers, whereas Google is advertising-led. For Google all additional data is potentially of use in improving its targeting and profiling systems, potentially leading to increased revenues across its advertising function. In particular Android Pay will allow Google access to huge amounts of data relating to offline purchases – something which is currently out of their reach.
Regulators may well have a part to play. In Europe for instance, with a new EU data protection regulation in negotiation, the implementation of the new technology will undoubtedly be of interest to legislators, particularly given the potentially sensitive nature of the data being collected.
However the new tech wars play out, it seems likely that adtech companies will find a way to exploit the massive data flows involved, and that providers, consumers and regulators will all need to be alert to the potential consequences of very private data being collected at all times – not just when online.