Google Wallet was first introduced in 2011 as an Internet payment platform that also did mobile payments, similar to PayPal (Google even poached a PayPal exec to work on Wallet, just as they were about to sign a deal that would make PayPal the backend of the service, provoking a lawsuit from PayPal). In the mobile payment arena, Wallet failed to gain much traction for a number of years, mostly due to Google's near-nonexistent efforts to market the service, though the slow adoption rate among major retailers didn't help its success either.
If you've never used your phone to pay at a counter before, it works quite simply. Most retailers in this day and age have installed near-field communication, or NFC readers, atop their traditional credit card readers that can detect when another device with an NFC chip has been placed an inch or two away. From there, the user's pre-entered credit or bank card information is transferred between the two computers, and the goods have been purchased.
Though Google pioneered mobile payments technology originally, their competitors have severely lapped them in terms of features and technology. Last year, Apple announced their own payment service, which features compatibility with the Apple Watch, something no other player is boasting at the moment. Samsung Pay will work with card readers not outfitted with NFC in addition to ones that are, thanks to Magnetic Secure Transmission, a technology invented by LoopPay which Samsung bought earlier this year. Also in the works for early next year, CurrentC is a mobile payment system being developed by a group of retailers including Best Buy, Target, and Walmart that will link directly to users' bank accounts. This system will cut out credit card companies, eliminating fees that retailers would have to pay, but also fraud prevention checks that credit card companies do.
The adoption rate for mobile payment systems among users has not been amazing. Part of the blame resides on Apple and Google, for only allowing a certain subset of iPhone and Android users with the latest operating systems to use it. Another factor is the still-limited number of retailers currently offering support for mobile payments (not to mention CVS disabling them following the Apple Pay announcement). But there's also the matter of inherent advantage over traditional payment methods. Aside from the occasional coupon notification, or automatically applying one's rewards card to a purchase, there's no clear edge in reaching into a pocket and taking out a phone to pay for something, versus taking out a wallet to do so. Giving users tangible reasons to use mobile payments, besides the fact that it's pretty cool, will be the primary challenge faced by Google and Apple as all the new services offered by these companies begin to take their place in the market.
As Square found its niche in small businesses that didn't want a costly traditional card reader, Google and Apple will have to work on developing a hook to attract users to switch to mobile payments. Using Apple Pay on the Apple Watch has been described as a high point of the device in reviews. Perhaps there's something more that can be done there, as Android Wear, a version of Android designed to be used on smart watches, has yet to incorporate Android Pay support. Holding one's watch over a payment kiosk is a clear advantage over paying with a credit or debit card, as it actively removes a step from the process, unlike paying with a phone. We should see some substantial improvements to the services in the coming months as companies vie to assert their place in their customers' payment habits.
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