There's No War Between Android Pay and Apple Pay

Android Pay's announcement lacked the jaw-dropping excitement of last fall’s Apple Pay release. As you can tell from the name, the Android Pay playbook is remarkably similar to Apple Pay.

Android Pay will use an on-board Near Field Communication (NFC) chip and tokenization services from the major networks to deliver a token from the phone to an NFC-enabled point of sale. Just like Apple Pay. Android Pay is supported by more than 700,000 merchant locations with really famous logos. Just like Apple Pay. Android Pay will provide APIs for app developers to take in-app payments from the on-board wallet. Just like Apple Pay. On phones with fingerprint scanners, you can enable payments with just a fingerprint scan. You get the picture.

There are differences. While details are scant, rumor has it Google won’t charge banks a fee as Apple does on the transactions. Additionally, technical differences in the operating systems underlying the payment system exist, but they won’t affect how every day users experience the system. Android Pay will suffer a slower upgrade path than Apple Pay, due to the lack of hardware support for the newer operating system (it can take Android twice as long to get users upgraded).

This isn’t about a holy war between Apple and Google. There is no war. NFC won the war and now we are seeing all of the armies gather together under its flag. We love to write about competition, and as consumers we love to see competitors struggle for our business and build continuously better products. When it comes to payments, though, we need standards and reliability.

With the alignment of the two operating system platforms on NFC, on user experiences like fingerprint unlocking and on both in-app and retail payments, consumers, retailers, and app developers can build an ecosystem we can all understand. Credit cards work great because they are ubiquitous. Everyone knows how to use them, everyone can use them everywhere, and every retailer has incentives to be a part of the system.

An NFC-based mobile payments experience will have this same effect. Over the next five years more and more retailers will add NFC-capable terminals. More phones will be fully capable of NFC payments with fingerprint sensors. More consumers will carry those phones.

So if it’s not a war, are there any losers? Companies focused on plastic cards, but not NFC, lack a clear path forward. Transitory technologies like Samsung Pay’s MST also have an unclear path, but also have a strong transition period as they enable payments at non-NFC enabled terminals. MST is a strong player because the user experience is very similar (hold a phone to a reader), even if the technical method is not the same.

The war is over. Long live NFC. Long live Apple/Android Pay.

Matthew Goldman is CEO of Wallaby Financial. 

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