Mobile payment is increasingly in the headlines as major brands all develop their strategies and look to gain market share, which has resulted in a wide array of new payment innovations being announced.
When looking at Bango Payment, Apple Pay, Samsung Pay or Android Pay it’s easy to get confused.
- Smartphone wallets like Apple Pay, Samsung Pay or Android Pay are designed for buying physical goods – they increase the convenience of paying in-store using your credit card or bank account without the need to carry your physical wallet in addition to your smartphone.
- Bango enables internet (app store, web etc.) payments to be completed simply, securely and efficiently. Without the customer needing to own a credit card, or even have a bank account.
Most of these payment products focus on paying for physical goods in-store, using traditional Point of Sale (POS) terminals. Hardware manufacturers see their smartphones as the logical replacement for the wallet, positioning themselves into the consumers everyday purchase flows. Apple Pay, Samsung Pay and Android Pay are all looking to own this space. While Apple Pay and Samsung Pay are clearly device specific, Google intends Android Pay to be more of a developer framework.
The primary benefit a smartphone wallet delivers over traditional cards is the advance in user authentication – including fingerprint authentication, two step confirmation via the secondary network channel and additional confirmation of location. This is especially true in countries like the USA where card swipe is still dominant and chip and pin is not available.
If not done right, wallets force all the disadvantages of “card holder not present” payments onto what should be secure, in-person, in-store purchases. This results in the card companies having to manage the risk of significant increases in fraud as tricksters effectively find new ways to steal products from stores.
Increasing uptake with growing POS deployment
The concept of using smartphones as a payment wallet has been around for many years, uptake has been poor due in most part to the slow deployment of radio based Near Field Communications (NFC) POS terminals required to process the payments. Apple entering the market has helped change that resulting in commitment to support Apple Pay from a growing list of major retail brands.
Samsung has adopted a more encompassing approach by acquiring LoopPay, which allowed them to add Magnetic Secure Transmission (MST) technology into their latest GALAXY S6 smartphone range. As a consequence customers can pay by holding their smartphone next to any POS terminal, including those that still only accept magnetic card swipe.
What about digital content
In all cases the transaction is still charged to a bank account or credit card that the user has registered. Apple, Google and competitors include “digital” in their product marketing because they naturally don’t want to preclude the digital world. But the category of digital products targeted by these technologies today is typically limited to tickets, parking and vouchers, rather than music, movies, apps or games.
True digital stores, such as Apple iTunes, have been successfully processing payments for years using a tried and trusted model where customers register credit cards and pay. There is little need for adding Point of Sale technology like Apple Pay when current iTunes payments already work for digital content.
Growing digital content sales
By working with Google, Samsung and others, Bango has clearly demonstrated how Direct Carrier Billing delivers significant benefits like higher sales conversion and smoother customer experiences, especially in markets with low credit card use and fewer bank accounts. Direct Carrier Billing is essential for growing digital store uptake and revenues.
Bango recommends Apple adds Direct Carrier Billing support to iTunes as a core part of their payment strategy as soon as possible. Doing this through the Bango Payment Platform ensures mobile operators gain a consistent, familiar interface with all app stores. The use of a standard platform enables mobile operators to keep costs down, optimize sales success and deliver the best possible customer experience.
It is likely that the smartphone will go on to replace today’s POS experience, completely removing the concept of wallets or for consumers to stand in line and swipe their phone on another device to pay. Extending the app store model simply allows a customer to select the product (or indeed scan it), authenticate and pay – entirely through the smartphone screen.
For further reading see https://blog.bango.com/2014/10/13/where-next-for-mnos/#more-4569