Mobile NFC payments market: key players, current situation and future prospects

" The battle for mobile software dominance revolves around two companies: Apple and Google ."
New york times

In recent years, curious novelties have appeared in the IT sphere, allowing more and more users to discover the world of mobile payments and shopping, “without getting a wallet”. The undoubted convenience of the process of making a purchase without messing around with a wallet leads to the fact that an increasing number of users want to have with them a device that allows them to pay for purchases instantly and not worry, leaving the house, and you did not forget the card or PIN code to it. The solution to this problem not so long ago was the use of telephones (and other gadgets) as devices for making fast and secure payments.

The names of the main brands competing in the IT market for the opportunity to provide humanity with all the new products, from hardware to cloud services, are widely known. Of course, such giants as Google and Apple could not stay away from the development of mobile payment systems.

First - in September 2014 - Apple presented its new product. And a year ago in the same numbers - October 20, the system became available to residents of the United States. Apple Pay is no longer just an application, but a payment platform built into the operating system of Apple devices. These include: iPhone 6, iPhone 6s, iPhone 6 Plus, iPhone 6s Plus and Apple Watch. Through iTunes or using simple photographing, the user receives a digitized version of a bank card in his device and can subsequently make payments from this card (or several cards) using wireless NFC . This is a high-frequency communication technology that allows data to be exchanged between devices located at a distance (about 15 centimeters) from each other.

Issue 1: Mobile NFC payments market: key players, current situation and future prospects
Issue 2: The future of p2p payments: when the smartphone replaces cash
Issue 3: Apple's mobile payment system: practical use and development prospects
Issue 4: Apple Pay will be available on mobile websites, and will also be fully launched in Russia by the end of this year.
Issue 5: How does Apple Pay affect the payment industry?
Release 6: Starbucks Mobile Payment Success Secrets
Issue 7: This fall Apple Pay will be available in Russia, Japan and New Zealand
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NFC technology is also used in Google’s Android devices, which can be used to make payments in the Android Pay system. New from Google Inc. It was launched in September 2015 and at the moment has already shown itself as a competitive model with respect to Apple Pay. In particular, because Android Pay is not inferior to Apple's payment system for either convenience or safety of use, but it also has a certain advantage in compatibility.

Contactless payment services are becoming a trend in the market for mobile systems. Following Google and Apple, Samsung and LG took up the development of their platforms. According to unofficial information, the G Pay system from LG will use the same NFC standard as Android Pay and ApplePay, and a fingerprint scanner will be used to protect the process.

The Samsung Pay system stands apart from its competitors, primarily because it uses the MST technology, Magnetic Secure Transmission, developed by LoopPay for data transfer. MST works not only on devices that support NFC, but also on all magnetic strip card reader terminals - and these are used everywhere. Data transfer is as follows: MST generates a dynamically changing magnetic field by generating alternating current. The reader perceives this action as if the user had conducted a magnetic stripe card across the terminal, and not just brought the phone to it. The payment procedure is protected in the same way as in LG and Google systems by a fingerprint scanner. However, the magnetic reader technology itself is largely outdated and unsafe, therefore, the introduction of this payment system was skeptical by computer security critics, including Kaspersky Lab specialists.

But despite this, Samsung, along with Google, remains one of the main competitors of Apple in the struggle for users of mobile systems. And although Samsung Pay and Android Pay are lagging behind the apple pioneer in terms of implementation, however, Apple’s business is still not going as well as we would like - according to Bloomberg.com statistics for June 2015, attempts to pay using Apple Pay was undertaken by only 13% of the surveyed 1,500 iPhone 6 and iPhone 6 Plus owners. This is an indicator of a rather careful attitude of users to the novelty. Nevertheless, there is reason to believe that due to the active advertising campaign of Apple and its competitors in the development of payment systems, as well as the change of terminals at most of the US pay points for chip card readers, the popularity of mobile payment systems will soon gain momentum.

Not wanting to remain in the shadow of their shrewd competitors, Microsoft eventually joined the race. In mid-October 2015, Microsoft Vice President of Operating Systems Joe Belfiore (Joe Belfiore), in an interview with The Verge and Recode magazines, announced the modernization of Windows Wallet, a Windows-based payment system. We have already seen Microsoft’s mobile wallet before; however, as stated by Belfior, the Windows Wallet will literally be recreated. Currently, developers are considering various payment scenarios. When will the updated wallet from Microsoft is not yet known. It is also not known what technology will use the payment service. In an interview, Belfior only casually mentioned Windows Hello - Microsoft's facial recognition technology, but the vice president did not answer the question whether it was implemented in the application, noting only that we would soon find out.

Compatibility

Android Pay is a payment platform embedded in the operating system of Android devices and running on all phones with Android Kitkat 4.4 and above that support NFC technology. It is worth noting that in the United States, which is the main field for the competition of giant brands, devices that meet the requirements of Android Pay, about 50 million (more than 70% of all Android phones in the country). For comparison: the actual number of users of Apple Pay payment technology in the United States is 600,000. These are people who regularly use Apple Pay. In total, in the United States at the moment about 14 million potential users of Apple Pay.

I must say, Google is not going to lose ground and plans to work on full-fledged Android Pay compatibility with a much larger number of phones, including on earlier platforms than Android Kitkat 4.4, while Apple’s vulnerability is a relatively small coverage of devices. And this is despite the fact that in addition to iPhones, Apple Watch payment system is also equipped with Apple Pay multifunction watches.

How does this even work?

The principle of operation of payment systems from Google and Apple, in fact, is the same: you want to buy a product and choose it. Then bring your smartphone (or watch in the case of Apple Watch) to the payment terminal. Terminals supporting the transaction type in question are labeled with the appropriate icons:



You see a transaction confirmation window. Further you use Touch ID or the password for confirmation of transaction. After that, the confirmation information is transmitted to the payment terminal.

Security

Apple Pay works with a Touch ID — a unique identifier that uses your fingerprint or with a password that you specify. Card numbers and transactions are not stored on the iOS device or Apple servers. Transfer of a bank card number is not involved at all. The number is replaced in the transaction process with a unique code Device Account Number, embedded in a special chip of the Secure Element smartphone. Among other things, access to the data stored in the gadget can be blocked using the Lost Mode, which also allows you to completely delete all information about transactions and bank cards themselves from your mobile device. Actual in case of loss or theft of the device.

When using the payment system not with the iPhone, but with the help of Apple Watch, the situation becomes even more interesting. In September 2015, an update was made for Apple Pay. The most important feature of it is that now the user can activate the device lock. So if someone steals a gadget, it will be almost impossible to get data from the device or just use it. Eddie Q, vice president of Apple Inc., once said: “If I take my watch and give it to you, they will know about it and will not work.” Sensors embedded in the Apple Watch can recognize when the device is attached to the wrist and when the watch is removed from the hand. According to Kew, Apple uses this data to simplify payment. However, the senior vice president said that users can also select a specific security mode that requires authentication each time you try to make a payment. Regardless of whether you use this option or not, each time you pay for a purchase, you will need to press a special button on your watch.

What about Android Pay ? At the same time, the plus and minus of this system is that it cannot be used on smartphones where root access is obtained. Google guarantees the security of their payment system only when using a certain set of API available on phones without root. However, at the same time, Google understands that there are many experienced users on Android using rooted phones, and are monitoring the situation, remaining open to possible changes if they are not associated with security risks. An example of this is Android 6.0 Marshmallow - the latest version of the Android mobile operating system. The new approach implemented in Android M assumes that applications will ask for permission to access certain critical parts of the system not at the time of installation, but as needed. Access control is at the discretion of the user. In addition, you can see which programs have access to a particular function. After this, you can, for example, deny this access to everyone at all.

The platform for protecting client data in Android Pay also uses tokenization and Android Device Manager, which allows you to destroy all data on the device in case it is lost. With the release of Android 6 Marshmallow, a fingerprint payment confirmation will be available to the platform user. As you can see, from the point of view of security and convenience of the user, Android Pay is catching up on the Apple payment system, released a year earlier, in long strides.

Perspectives

According to press releases, one of the next steps for Google with respect to the Android Pay system will be to introduce a loyalty program and reward points for using the system. Users will be able to store their credit cards on the phone, as well as loyalty cards and gift cards. When making a payment, loyalty points will be automatically charged to the user's phone.

The loyalty program was also attended by experts from Apple. The main thing in updating Apple Pay this year was the improvement of the mobile application for storing payment cards - Passbook. The new application is called Wallet . Thanks to him, all the cards can be stored in one application. In addition to credit and debit bank cards, users will be able to attach loyalty cards and company cards of a particular store to a smartphone. A nice bonus would be that if the user forgot to use the discount card in the store, the smartphone will remind him of this.

In addition, the next logical step from Apple, obviously, will be the realization of the possibility for users to transfer money to each other in the same way that purchases are made. It is likely that a new form of money transfer will appear in the Wallet application, since The patent application has already been filed by the manufacturer.

Meanwhile, Google, which released the notorious Google Wallet app in 2011, decided not to lose ground and use Google Wallet for payments between users. The updated application will be available for both Android and IOS users.

The potential of contactless mobile payment systems is enormous - the use of mobile devices instead of the usual wallet is gaining popularity with each passing month. And, of course, advanced companies - such as Apple and Google - will not leave their users without new products and will continue to improve their systems.

Only one grieves domestic users - neither Apple Pay nor Android Pay will appear in Russia in the near future. According to some forecasts, the emergence of payment services from Google and Apple in Russia can be expected only a couple of years after their launch in Canada, Australia, China and the leading countries of Europe. Although this is only a tentative assessment - events can develop much more rapidly.

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