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Comparison Of Contactless Payments: Apple Pay, Google Wallet, Softcard, Etc.

Contactless payments represent a radical departure from traditional retail shopping. Instead of physically handing cash or manually swiping your credit card, you can shop without ever making "contact" with cashiers or terminals.

The basic concept behind contactless payments is actually quite old. Businesses have been using radio frequency identification (RFID) technology since the ‘80s. Usually though, they relied on RFIDs for inventory and tracking.

The earliest example of actual contactless "payments" was in 1997 when gas stations began using Speedpass. Drivers could fill their tanks and settle their accounts at the pump without using cash or cards. You may already be familiar with E-ZPass — a payment solution commonly used at highway tollbooths.

Contactless payments have evolved substantially over the years, with many of the most popular options built around near field communication (NFC). The technology is very similar to Bluetooth. Yet instead of wirelessly sending data across meters, NFC allows data transfers across centimeters. This proximity requirement is just one of many security measures designed to prevent theft and hacking.

Nearly all contactless payment options follow the same general process: You input credit card information into your mobile phone (or watch). The data remains encrypted within your device, making it harder for thieves to get their hands on your financial information. Some devices don't even store credit card data — they create a substitute token that is linked to your credit card account.

When you're ready to buy at the cash register, simply wave your device across the NFC-enabled terminal. 

Some of the more popular contactless payment options out there include:

1.  Google Wallet

This was one of the first commercially available contactless payment solutions in the retail world.  However, Google’s launch enjoyed limited success — namely due to technical glitches and poor consumer awareness.

2.  Softcard

Also an early entrant, Softcard was introduced by Verizon, AT&T and T-Mobile before being bought by Google. It has since been discontinued, although Google has incorporated some of the code into its aforementioned Wallet.

3.  Apple Pay

Arguably the most successful deployment of contactless payments is Apple Pay.  Available in both the iPhone 6 and Apple Watch, this payment technology has taken the world by storm in its very short tenure.

Are Contactless Payments a Fad or the Next Big Thing?

Contactless payments are already hugely popular, but it wasn’t always like this.

Many early adopters were frustrated by the setup process — especially with Google's initial launches.

There also existed a chicken-and-egg dilemma within the retail industry:

  • Merchants would only invest in NFC-ready terminals if enough consumers demanded contactless payment options. 
  • Customers would only buy into contactless payments if they could shop at their favorites stores.

Apple has helped resolve this issue with its most recent product launch. Before introducing Apple Pay to the general public, it secured commitments from more than 220,000 merchants in advance. What’s more, the company also released the iPhone 6 and Apple Watch with contactless payment capabilities enabled.

Another early hurdle was security (or the perception of security).

Contactless payments are a break with tradition, and some shoppers are uncomfortable with the idea of payments at a distance. Again, we can thank Apple for addressing these issues. The company has taken great strides to make NFC transactions more secure. Apple has also done a great job of educating consumers about the many benefits of contactless payments.

Should You Invest in Contactless Payments for Your Business?

As a general rule, offering more payment options to your customers is usually a good idea. With more than 220,000 merchants already invested in the Apple Pay ecosystem, you'll be able to tap into a huge pool of potential customers.

The good news is, you don't have to commit to any single technology. Apple Pay, Google Wallet and most other contactless payment solutions out there work on the same platform. If you have an NFC-enabled reader, you're good to go.


Topics: Software and Payment Integration, Mobile Payments

Welcome to the BluePay Blog!

Whether you're a small business, an enterprise corporation, a financial institution, or a software partner, we have created a series of blog posts to help you and your customers, learn more about the complex nature of payments. Take a look to learn how payments can help to simplify your business operation, and may even help to grow your revenue.

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