Towards an OS/device-based mobile wallet

Towards an OS/device-based mobile wallet
Over a year ago, we published a 2014 edition of our annual Top Retail Payment Trends Report (2015 edition is here), in which we distinguished between app-based wallets – majority of mobile payments solutions in the market at that point – and device-based wallets. We suggested that payments would become ever tighter integrated into the device and the operating system (OS) and that we will see the emergence of device-based wallets, “which store securely on the phone a token associated with payment credentials, which can be discovered and summoned as needed by any app or a site reached via mobile browser.” Then Apple Pay came along and demonstrated to everyone the beauty of a payments solution tightly integrated into the OS and the device itself. There is no separate wallet app; customers can configure the solution via the Settings page and store their cards in Passbook. And the token of the credentials can be summoned for an in-store or an in-app transaction. Apply Pay raised the stakes for everyone in mobile payments. The challenge for Google is that the Android ecosystem is nowhere near as tightly controlled as Apple’s. Yet, in the last couple of weeks, we’ve seen a few interesting moves that indicate steps towards OS and device-based wallets in the Android ecosystem. First, Samsung, the leading Android device manufacturer acquired LoopPay, which uses Magnetic Secure Transmission (MST) technology to enable mobile payments at the existing POS devices. Then, Google announced it was buying Softcard’s technology. Finally, the news just emerged that Google would be launching Android Pay at its Google I/O conference in May. LoopPay’s wallet today requires additional hardware, such as phone cases or fobs. I am convinced that Samsung will seek to get away from that and would integrate the technology into its devices. The big question is – why continue to invest into “mag-stripe technology,” and isn’t it a step backwards? It certainly feels that way, although I don’t think it indicates Samsung’s shift away from NFC; my view is that this is a pragmatic move recognising that even with EMV migration underway, the US will continue to accept magstripe-like transactions for the foreseeable future. After all, Visa has also invested in LoopPay back in the middle of last year. The big question with Google’s purchase of Softcard’s IP is whether Google would go back to SIM-based secure element, now that the mobile operators would finally play ball. My guess is that it won’t. HCE gives everyone more flexibility, and leverages the investments the issuers and networks have been making into tokenisation. Visa just announced yesterday that it has been partnering with FIs around the world to enable HCE-based digital services. HCE is also what would enable Android Pay, which would allow third parties to build in payments features into their apps, either for in-app or in-store purchases. Instead of going back to SIM-based SE, I suspect Google will make use of Softcard’s loyalty functionality and will gain access to the MNO distribution networks. According to the announcement, Google Wallet will come pre-loaded on the handsets sold by the operators, which I assume will get paid a distribution fee. As various solutions get tighter integrated into device hardware and operating system, it will be interesting to watch how they would co-exist. Could the latest Samsung Galaxy device support a PayPal app with biometric authentication, LoopPay, Google Wallet and Android Pay without at least confusing the customer? Or are the two giants in the Android ecosystem on the collision path here? Clearly, there is no respite from interesting developments in mobile payments. I am sure we’ll see another wave of interesting announcements next week at Mobile World Congress in Barcelona. I had the privilege to serve as a judge for GSMA Global Mobile Awards, and I am certainly looking forward to the ceremony and the rest of the Congress. I’ll make sure to blog my impressions when I am back. In the meantime, drop me a note if you would like to meet in Barcelona next week.

TD Canada – Android Tablet App Fail

TD Canada – Android Tablet App Fail
We are just about to release a new report that evaluates the tablet apps from the top Canadian Banks. The space is expanding rapidly and banks are working hard at building and releasing new apps. Last week TD Bank Canada released a brand new app for Android tablets. Although the app wasn’t ready in time for our review, I did attempt to take it for a spin. Unfortunately I wasn’t able to. Google Play indicates that the app is incompatible with my Samsung Galaxy Tab 3 8.0.

TD4.jog

Banks are definitely struggling with Android and haven’t recognized its staggering growth. They have been quite slow to come out with Android Apps. Only 2 of the top 13 US banks have released Android tablet apps. Those that have released apps are running into issues. TD is the second bank I have run into that presented me with this device incompatibility issue – the first was Bank of America. TD’s Android attempt is even more puzzling. The bank has been busy with a new promotion geared at customers that open new accounts. Folks that open new accounts (and meet certain conditions) receive a brand new Samsung Galaxy Tab 3. The very same class of device I attempted to use the app with! At first I thought that TD simply hadn’t optimized its app for these Samsung devices. That would be a no-no, especially since the bank has been handing them out to new customers. I did however take the time to read the detailed app information in the Google Play store. Apparently the app is “best experienced when used on the following devices including Samsung Galaxy Tabs 2 & 3.” I’m definitely left scratching my head in bewilderment.

TD5

Microsoft and Nokia: What Kind of Marriage Will It Be?

Microsoft and Nokia: What Kind of Marriage Will It Be?
Today Microsoft announced that it has purchased Nokia’s mobile phone business. According to the announcement, “Under the terms of the agreement, Microsoft will pay EUR 3.79 billion to purchase substantially all of Nokia’s Devices & Services business, and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion in cash.” Both companies have been struggling to adapt to changes in mobile computing – Nokia has lost its leadership in handsets, and Microsoft was rather late in announcing its latest Windows mobile operating system, which remains a distant third to Apple and Android. So, what can we expect from this marriage? One of the commentators on The Times website summed up the question rather bluntly and concisely: “Interesting. Microsoft, who failed to anticipate that computers would become more like phones, merges with Nokia, who failed to anticipate that phones would become more like computers. So will they end up in a perfect partnership of complimentary skills and experience? Or will this create a behemoth that consistently fails to predict the future?” In many ways, the merger is a natural progression of the deep partnership that the two companies struck two years ago. It appears now that both agreed that the next step in the integration was required. Or was it perhaps a defensive move for Microsoft to make sure its main handset partner does not fall into competitive hands? Mobile platforms so far have been characterized by two rather distinct approaches. In the “closed” camp, there is Apple with its tightly controlled and integrated ecosystem, from operating system to handset to strict app approval process. In the “open” camp, we have Android – an open operating system available to multiple handset manufacturers. Microsoft and Nokia alliance so far seems to have fallen in between the two camps – it was neither as tightly integrated as Apple, and given Nokia’s dominance of Windows-based handsets, perhaps not as widely open as Android. While the merger is pointing towards increased integration, the question remains whether the combined Microsoft/ Nokia indeed want to fully emulate Apple’s closed strategy. One of the selling points of the latest Windows platform is its seamless integration across devices, from desktops and laptops to mobiles and tablets (a move Celent applauded when it was announced), and I don’t think Microsoft has any intentions of entering the hardware market in the traditional computing space. The outgoing Microsoft CEO Steve Ballmer described today’s announcement as a “bold step” and “a signature event in our transformation.” It certainly is. More competition in the mobile platform space is very welcome, so we wish Microsoft and Nokia’s marriage is a success.