Apple Pay vs. Google Wallet: A Comparison of Mobile Payment Systems

On September 9, Apple made its big reveal for this year’s iGadgets: the iPhone6 and iPhone6 Plus, the $350 iWatch and something called Apple Pay, a mobile wallet system. If mobile wallets already seem familiar, it may be because you’re one of the relatively few people using Google Wallet or Softcard (originally called Isis), both of which have been around for years.

Related article: Everything You Need to Know about Apple Pay

In fact, Apple Pay is late to the table, entering a crowded, if somewhat unspectacular field, at least as far as user adoption is concerned. But Apple Pay’s distinctive features lead some commentators to label it a game-changer. As some say, Apple Pay could finally make mobile payments happen.

Security

NFC

The technology that powers mobile wallets is called near-field communication, abbreviated as NFC. Basically, NFC involves smart chips and waving, rather than magnetic strips and swiping. NFC incorporates radio-frequency identification (RFID) signals to transmit limited amounts of data from one device to a receptor located a few inches away. If you have Passbook or a Starbucks app on your Smartphone or tablet, you may already be using NFC technology. (Tech Radar)

Americans have been hesitant to embrace mobile payments. One reason: security, named by 46 percent of respondents to a Thrive survey as a reason for not using mobile wallet systems. All three mobile wallet systems use NFC and RFID technology. (Cornerstone)

Softcard, developed through collaboration between AT&T, T-Mobile and Verizon, uses a PIN to enhance security. It uses a “secure element” (SE), a piece of hardware that stores encrypted financial information. The merchant doesn’t see your financial info–no numbers, names, nothing. It is isolated from your phone’s hardware and OS, and if your phone is lost or stolen, you can disable the app remotely.

Google Wallet did originally use a secure element but soon found itself in a battle with carriers like Verizon who blocked access to it. Google ended support for physical secure elements in 2014 to instead use host card emulation (HCE), an allegedly less secure software solution.  Like Softcard, Google Wallet uses a PIN to authenticate transactions. The app can be disabled remotely from the Wallet website.

Apple Pay incorporates a hardware secure element like Softcard, but instead of entering a PIN code, Apple Pay uses the TouchID system which reads your fingerprint to authenticate transactions. Apple Pay creates a one-time transaction code which encrypts your data. The merchant also never sees any of your financial information. If you lose your iPhone, you can suspend all Apple Pay transactions through the Find My iPhone app without canceling your credit cards.

All three of these tools have similar security features, so who stands out? Because Apple Pay is touch-activated, there’s no need to open an app, enter a PIN, and navigate to a card or coupon. You don’t even need to wake your display, just hold your iPhone near the contactless reader. Convenience aside, its a lot easier to commit fraud if you know someone’s pin than it is to use their fingerprint when buying something.

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Apple Pay and Softcard use a hardware secure element to store transactions which is an advantage over Google Wallet’s host card emulation strategy. Also, many believe that the the iPhone or iWatch will be more secure because Apple produces Apple phones and all the hardware within, unlike Android’s many producers like HTC and Samsung.

Security: Advantage Apple Pay

User Experience

TouchID

ApplePay has partnered with American Express, MasterCard and other financial institutions to create locally-stored digital versions of a customer’s debit and credit cards, potentially eliminating the need to carry ANY cards.

Adding individual cards to Apple Pay is dead simple: snap a photo of your card with your iPhone iSight camera and it gets added to your Passbook automatically as your default card – possibly using Optical Character Recognition technology (no confirmation yet on this). You could also type in the card information if you prefer that way – and it gets stored in your Passbook. Additionally, if you wanted to use the Credit card already set up in your iTunes account, you can add it to Passbook by simply entering the card security code. At any time though, you can change your payment preferences & card used via Passbook.

In normal transactions, every time you hand over your credit or debit card to pay, your card number and identity are visible to the cashier. But with Apple Pay, instead of using your actual credit and debit card numbers, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element, a dedicated chip in iPhone. These numbers are never stored on Apple servers. And when you make a purchase, the Device Account Number alongside a transaction-specific dynamic security code is used to process your payment. So your actual credit or debit card numbers are never shared with merchants or transmitted with payment.

With Google Wallet and Softcard, on the other hand, the set up process takes more time and involves several steps, even though the process is similar. Once signed in to your Google account, you must enter your personal and billing information and save it, then visit a separate website to continue the process. There, you have to put in more information, before downloading the app to complete sign up. Thankfully, Google Wallet also lets you snap a photo of your card to add it (pretty much like Apple Pay), but Softcard lags here. Only once you’ve set up a PIN number can you begin adding specific credit cards to the app itself… via the financial institutions website.

So, even though Google Wallet and Apple Pay requires you to store your credit card information somewhere (iTunes or Passbook in Apple’s case and Google Account in Wallet) Apple Pay appears to be more secure with transactions as your purchases are kept “private”. Apple doesn’t store the details of your transactions so they can’t be tied back to you. Your most recent purchases are kept in Passbook for your convenience, but that’s as far as it goes. On Google Wallet, even though your original credit/debit is not shown to the merchant, a temporary “virtual card” is shown to the merchant. Slight edge for Apple Pay here.

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Also, since you never have to show your credit or debit card at the point of purchase, you never reveal your name, card number, or security code to anyone. This is a huge plus for many folks who’re concerned about privacy.

Enabled by TouchID, Apple Pay’s user experience is seamless and secure. iPhone 6 will recognize and authenticate you based on your fingerprint at any point of sale purchase, where you can just place your finger on the Touch ID sensor with your iPhone near the contactless reader, and your payment will be sent. Even with payments within apps that accept Apple Pay, one touch is all it takes to authenticate, verify and make payment. This is as simple as it can get.

User Experience: Advantage Apple Pay

Merchant Availability

retailers

Apple announced that it has also teamed up with high powered merchants, including Subway, Disney, Walgreens, Macy’s, Sephora, Whole Foods, McDonald’s and (duh) Apple Stores. Shop at any these establishments, and pay for your purchases directly through ApplePay – no credit cards or PIN required.

Softcard hasn’t done too badly in signing merchants, inking deals with heavyweights like Aeropostale, Toys R US, Coca Cola, and mobile carriers like AT&T. Google Wallet has lagged in this area, not least because years ago T-Mobile and Verizon blocked the app on their phones in favor of Softcard years ago.

Although all of the players have announced support from some big name retailers, it’s ultimately a win for everyone. None of these retailers are using any proprietary point of sale technology that only supports one of these services. They are all using card readers made by companies like Verifone that adopt NFC as a standard. The technology is the same and open to everyone. The more retailers that get on-board with NFC, the more it drives forward NFC for everyone.

Merchant Availability: Advantage – It’s a win for everyone

Compatibility

NFC Capability

With all the advantages of Apple Pay, it would seem inevitable that Apple would eventually take over the mobile wallet market. But that conclusion discounts the overwhelming advantage of Android (and potentially, Google Wallet and Softcard) in the mobile market.

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Many of Apple’s own devices lack the necessary hardware to run Apple Pay or any NFC mobile wallet for that matter. This includes the iPhone 5 and the still-new iPhone 5C and iPhone 5S, and all versions of the iPad – never mind the iPhone4S or even older models. That leaves the vast majority of mobile devices without Apple Pay functionality. It also forces current users, who have probably purchased the iPhone 5S or 5C less than a year ago to upgrade if they want the technology.

Android has been in the mobile payment market for a long time, and the list of NFC capable devices is ever-growing. Many current Android users have the option to simply trade out their current SIM card for an enhanced, NFC capable one (if they don’t have one already). So although iPhone users have to wait a little bit longer, most Android users can try out tap-and-pay right now.

Compatibility: Advantage Google Wallet and Softcard

Still, Nothing Can Replace Your Wallet Entirely

Digital money wallet

There is the small matter of how to use mobile payments if your smartphone battery dies. What if you drop your smartphone and smash it to bits? And while you can wipe your device if it is lost or stolen, that also pretty much wipes out your mobile payment system too – at least until you install everything on a new device.

To be fair, all mobile wallets share these latter weaknesses. There’s no true winner here, besides a real, live wallet.

Who Wins? Apple Pay

Apple Pay

They all generally do the same thing and use similar technology, but because of Apple Pay’s superior security and user experience, we have to call it the winner. If, by the end of this year, the convenience of mobile payments finally becomes a “thing” for the masses, it’ll most likely be because Apple Pay made it so.

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  • MeCampbell30

    Yeah this is some grade A nonsense. You can add a card to google wallet by taking a picture. Google wallet hasn’t been blocked for over a year. And all contactless payment terminals use the same protocol. Any place that accepts apple pay will accept Google wallet. Too much iDelusion going on here.

    • @MeCampbell30:disqus Thank you for your feedback. While our article was already quite neutral, and clearly explained that all Apple Pay, Google Wallet and Softcard all use the same NFC technology, we did update it to reflect the picture-taking Google Wallet feature.

    • mironlulic

      Google Wallet has been a grade A flop!

      They are still blocked from using the secure element. They got around it through a software solution that is arguably less secure.

  • Illizit

    Who wins? Apple Pay?:
    one-touch checkout. You need to place a fingerprint and hold it. Ok, perhaps that counts.

    No card number entry.. yes you do. You need to have entered a card into iTunes in order to use it. Same as Google wallet. If you have purchased an app, you can use the same card on Android without having to enter it again.

    No need to type addresses? Yes you do. When you signup for iTunes, you entered an address. Same with Android when you purchased an app.

    No card information shared with merchant. Same as Google Wallet. It uses a “virtual card” just like Apple which is how they were able to get around the carrier resitrctions.

    • Guest

      @Illizit: Thank you very much for your thoughtful comment. Just as a point of reference, it IS possible to use iTunes without entering a credit card number. In fact, I have been using iTunes for more than a year and I have never entered a credit card number.

      • That one’s a notorious work-around, isn’t it?

      • 16UE

        I bet you have not purchased anything on iTune either. We are discussing payment here and you must have a payment type such as a credit card.

        • Ultmast

          You’re incorrect. You can use gift cards and balance to pay for purchases. There is no explicit requirement for a CC to be attached.

    • Thanks for your comment, we added a few clarifications to the article.

      Both Apple Pay and Google Wallet require you to save your CC info somewhere. In Apple’s case on iTunes + Passbook and in Google Wallet’s case in your Google account. However, Apple Pay seems to have (at least from the information we have now) made this an effortless and short process. Slight edge over Wallet, honestly.

      Reg: card information shared with merchant, you’re right, Google Wallet does share the virtual card information with the merchant.

      • Ultmast

        “Both Apple Pay and Google Wallet require you to save your CC info somewhere. In Apple’s case on iTunes + Passbook”

        I do not believe this is the case. The CCs in iTunes are separate from Apple Pay, but can be added for convenience. There’s nothing about Apple Pay that requires the storage of card information, and if you don’t have a card on file with iTunes, the only time Apple even sees your CC number is in authenticating with your bank/issuer that you possess that card. After that, it’s all tokens from the secure elements that are used and that get passed to the bank.

  • As an Isis (now Softcard) user for Android, I have to agree. Apple Pay is neither new nor revolutionary, but if mobile payments become the norm, it’ll be because of the hordes of iPhone 6 users wanting to use it.

    Earlier this year, 7 Eleven and Best Buy shut down NFC because it wasn’t worth it to keep it. You better believe that they’ll be changing their tune to accommodate the iHerd. (Source: http://www.mobilecommercedaily.com/nfc-takes-another-blow-as-7-eleven-best-buy-shut-it-down

  • Max

    Google Wallet and Softcard are more mature products so have more features than Apple Pay.

    Google Wallet and Softcard support storing loyalty cards digitally. At participating retailers, your loyalty card can be transmitted wirelessly when you do your NFC payment.

    Google Wallet also supports storing gift cards electronically with certain retailers. This is also supported on the Google Wallet iOS app but unfortunately you can’t use your gift card when paying with NFC.

    A Softcard app may be coming to iPhone now that the iPhone has the hardware to support it. More competition means a win for everyone. Google, Softcard, and Apple will probably start copying features from each other until they achieve relative feature parity.

    NFC payment terminals are still surprisingly hard to come by and that is what has limited my use of digital wallets the most. Unless Apple can encourage their adoption, Apple Pay may not catch on either.