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Let’s Examine Mobile Payment Systems

December 2014

By Tom Stibolt, MD, Mobile Musings Column Editor

Google, Apple, and several other companies are offering applications to allow one to use a mobile device to pay for goods and services. I am going to examine several that use Near Field Communication, a short-range, low-power wireless link that is based on radio-frequency identification (RFID) technology. It can transfer small amounts of data between two devices held a few centimeters from each other. Unlike Bluetooth, no special pairing is required to connect the devices.

The lure of these systems is that one does not need to carry cash or credit cards with them to make purchases. All transactions are performed using an appropriately equipped mobile device.

Google was among the first to offer NFC-based payment using Google Wallet. It was released in 2011 in the United States, and the number of people using it has grown very slowly. Worldwide, the growth has also been very slow. An interesting addition is that Google Wallet lets users send money electronically to other parties. This feature is not available presently with other services. The Wallet application is available for both Android and iOS devices.

The application is easy to use and provides several layers of security. A flaw in the security was recently fixed and there are currently no instances of fraudulent purchases. In addition, Google says that it is constantly monitoring its systems looking for any possible fraud. A four-digit PIN is required to unlock the Wallet app and send money. Google further stands behind the application by covering 100 percent of all verified unauthorized transactions in the U.S.

Apple Pay was released on Oct. 20, so it is quite new. At this time, it only is available for iPhone 6 devices. It can be used with iPhone 5 devices if the user also has an Apple Watch. There are no plans to make it available on non-Apple devices at this time. Apple has done a good job of signing up banks and credit cards to support Apple Pay.

Apple Pay takes a more aggressive approach to security for transactions. First, the service requires the use of Touch ID to make a payment, ensuring that a stolen phone cannot make a payment. Second, the service doesn’t share personally identifiable information with merchants. Apple provides a one-time payment identifier to hide transaction details and the buyer’s identity.

Another company has entered this field. Alibaba, a Chinese company that has recently gone public offers Alipay. Although initially only available in China, they now have an English version and are apparently trying move into the global market. Security is apparently similar to Google Wallet but the company is also exploring using fingerprint authentication similar to Apple.

Several other vendors offer payment solutions that do not use NFC. Instead, they produce barcodes on the device screen that are scanned to allow payment. PayPal, Lemon Wallet, and Square Wallet all have such offerings. Lemon Wallet is the only solution currently supporting Windows Phone. Another offering, Venmo, supports BlackBerry devices.

This will be an interesting area to watch over the next several years.

Last Reviewed: September 2017