Google Inc and Samsung Challenge Apple Inc in Mobile Payment Race

By Markets Fool.com

Google andSamsung both have plans to challengeApple for dominance in the mobile payment market.

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The search giant has made a deal to have its mobile wallet pre-installed on Android phones sold byAT&T,T-Mobile, andVerizon Wireless. Google has also acquired the technology behind Softcard, a mobile payments companyformerly known as Isis Wallet, started by the three carriers,GeekWirereported.

Samsung recently acquired LoopPay, a mobile wallet technology solution that uses point-of-sale, or POS, systems that already exists in 90% of stores, according to a press release announcing the deal. LoopPay leverages the existing magnetic-stripe readers at most stores, thus requiring no new hardware.

Apple Pay and Google Wallet, on the other hand, require readers equipped with near-field communication, or NFC, which is an additional investment for most stores.

What is Google doing?
In making a deal directly with carriers, Google is giving its Wallet service real estate on a large number of Android devices without the need for consumers to download an app. Google also plans to integrate Softcard technology, which allows users to complete transactions with what the company calls "tap and play."

In making this deal, Google has stopped the three carriers from developing their own wallet systems. It removes competition and makes the choice clear for consumers. In many cases, lack of choice is a bad thing, but here, having one digital wallet rather than four makes the platform much more likely to reach critical mass.

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Google Wallet should also benefit from the success of Apple Pay, as the NFC technology that stores need for one can be used for the other.

LoopPay makes phone cases that also hold the card needed to use its payment service. Source: LoopPay

What is Samsung doing?
Samsung wants to appeal to retailers by launching a system that can use the POS systems that stores already have in place. Credit card scanners can read the removable card or fob tied to LoopPay -- users must buy the card (starting at $49.95) or the fob ($10).

That point likely held LoopPay back, as it puts the technology onus on the consumer rather than on the stores. It also leaves customers in a position of having shelled out money for a product that many retailers still may not accept.

Samsung could remove this barrier by finding a way to integrate the LoopPay technology directly into its phones.

Will it work?
Apple Pay has been well-received since its October launch, but the general public has yet to fully embrace mobile payment technology. That attitude will probably change over time, especially as trust in digital wallets grows.Starbucks has proved though its popular payment app that customers will use digital payment technology, but paying for a latte and checking out at a department store for a larger purchase are two different things.

Google and Samsung are both trying to stake out the same turf as the digital wallet for Android users. The search giant has an advantage with Google Wallet available on phones sold by the three largest wireless providers. Samsung has the edge in that it has consistently been the top individual manufacturer of smartphones, according to IDC data.

The Samsung option also does not require stores to invest in new POS systems, but that advantage may disappear as NFC readers become more widespread.

It is an open race with the possibility that more than one company will establish its mobile payment system. Apple has the early lead and a user base that has traditionally been willing to embrace company initiatives.

Google and Samsung are standing on shakier ground, but their respective deals make them viable contenders.

The article Google Inc and Samsung Challenge Apple Inc in Mobile Payment Race originally appeared on Fool.com.

Daniel Kline has no position in any stocks mentioned. He has an iPhone but does not use Apple Pay, because his bank is not participating. The Motley Fool recommends Google (A shares), Google (C shares), and Starbucks. The Motley Fool owns shares of Google (A shares), Google (C shares), and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.