Pay-by-phone: the best alternatives

Published on Feb 22, 2016 in App Development
pay by phone

As modern times advance, the goal of all the big payments companies is to keep consumers from having to carry their annoying wallets up and down. In the future (and the future is already here), we will pay-by-phone. In other words: forget your wallet at home, now you just need to approach your smartphone to a payment terminal… and voilà.

Several enterprises are working on different projects in order to reach the perfect pay-by-phone system. The main ones are -who else?- Google with Google Wallet and Apple with its Apple Pay, but PayPal, Visa and MasterCard want to take their part of the cake too.

Google Wallet and Apple Pay

google wallet

On one hand, Android Pay lets users use their Android phones to pay in stores and within apps. Android Pay is available for Android phones and tablets running Android KitKat (4.4) or higher that support NFC (Near Field Communication) and HCE (Host Card Emulation), and for iOS devices running iOS 7.0 and above. For now, the Google Wallet app and the Google Wallet Card are only available in the US. Major banks and retailers including Visa, Mastercard, American Express and Bank of America have joined the Android Pay system.

On the other hand, the new Google Wallet app offers a quick and free way to send and request money on both Android and iOS devices: you just need a US debit card or bank account to link it to your app. Google Wallet works by scanning your credit card and adding it to the system. When it’s time to pay, you just have to unlock your phone with your PIN or pattern and tap it on the payment terminal. As a result, Google Wallet is quicker and easier than Apple’s alternative, Apple Pay, where you have to place your finger on Touch ID before making a payment. This makes this system a bit slower, because sometimes the fingerprint sensor doesn't work. Apple Pay can look more secure because it asks your fingerprint, but in case you lose your Android Pay phone, all you need to do is go to their website and revoke access to your Google Wallet account.

Besides, Android Pay is visibly compatible with way more phones than Apple Pay: Apple Pay only runs on iPhone 6, 6 Plus and later, iPad Air 2, iPad Pro, iPad Mini 3 and later and Apple Watch-compatible devices (this means you have to spend around $200 to upgrade an iPhone 5). There’s more than 700,000 store locations accepting Android Pay in the US (you can use it almost anywhere you see the new Android Pay or generic NFC logo). 83% of US banks and key stores support Apple Pay, but convincing people to make the shift (and expense) are Apple Pay’s biggest barriers to achieve mainstream success.

apple pay apple watch

Finally, Google Wallet offers more direct incentives, integrating retailers' loyalty programs right into Android Pay. In contrast, with iPhone users habitually need to show their loyalty cards or say their phone numbers to get the reward.

PayPal Here and Square

With more than 148 million active users, PayPal is the king of online payments. But since 2012, it also offers a processing solution for in-store and mobile merchants; it’s PayPal Here, a credit card reader and app that lets shops and individuals accept payments via iOS and Android devices. PayPal Here accepts credit and debit card payments, with a transaction fee of 2.7% per US card swipe and no monthly fees.

paypal here

PayPal Here is available in the US, Australia and Hong Kong. PayPal Here has taken the best of Square, the smartphone processing solution leader. Square is a little squared device that you plug into the audio jack of your tablet or smartphone to allow you to swipe a payment card. Square is available in the US, Canada and Japan for Android and iOS devices.

Both PayPal Here and Square work quite the same way, with a mobile reader that you plug into the headphone jack of your phone or tablet in order to read your card’s magnetic band. There are not big differences between both solutions, but users declare customer service on PayPal Here is way better, with 24/7 live customer support (while almost inexistent in Square), and they also complain because PayPal Here requires credit check and background verification before issuing an account.

Visa’s Checkout

Visa has long been behind the times in terms of e-commerce due to the long process users have to undergo when buying online, and its previous attempt in the sector ( in 2012) was a fail. Visa’s new bid is Checkout, a digital wallet that allows customers to store their Visa card information and those of its competitors: MasterCard, American Express and Discover. If you can’t with your rivals, join them: Visa has partnered PayPal and Google Wallet. Thanks to Visa’s Checkout, you can now buy after only supplying a user name and password.

MasterCard PayPass

mastercard paypass

MasterCard PayPass works by just approaching your credit card to the terminal. A green light and a beep will let you know that your payment has been successful. Most of the times you won’t even need to introduce a PIN code. As easy as that: tap and go! And with PayPass, actually your MasterCard doesn’t have to be a card anymore: it can now have the shape of a key ring or a bracelet.

Which features should a good pay-by-phone app include?

Pay-by-phone can indeed make the payment process easier and faster both for customers and merchants, but there’s some characteristics an app of this category should include in order to make the customer feel safe when using it. These are some of the musts of a good pay-by-phone app:

Perfect usability

Above all things, a pay-by-phone app must be intuitive and very easy to use, just with a few taps and swipes: a complicated interface will definitely frustrate customers and make them lose all the interest in it.

Employ NFC hardware

NFC makes the payment process easier and more secure for both the customer and the shop, so an efficient pay-by-phone app should absolutely take advantage of NFC technology and allow the transaction to be made with just a tap of the phone on the terminal.

Provide a variety of payment options

Any pay-by-phone app should offer customers the widest range of payment options possible, like multiple credit cards, PayPal and a bank account.

Cross-Platform compatibility

A pay-by-phone app should be accessible for the most part of customers. This means that, at least, a successful pay-by-phone app ought to be compatible for Android and iPhone devices, but don’t forget Windows Phone and BlackBerry users as well. To make an app available for the highest number of platforms possible, developers should design user interfaces and options as similar as possible between the different OS’s.

Rewards program

Take care of your costumers: let them feel special by offering them loyalty bonuses, discounts or free products for using your pay-by-phone app.

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