Enabling Technologies

This is How it Was Supposed to be...yet how Android Pay Could Fail


With everyone writing about Apple Pay vs. Android Pay, I didn't want to left behind! Here's a slightly different perspective than what you may have read already:

When the mobile operators in the US got together in 2008 to establish a new mobile contactless standard, the objective was well understood: Let's create a common sandbox - a common currency - for mobile payments. The original intention was not to create an Isis Wallet (later renamed to Softcard). In fact, as early as 2010, there were many conversations between Isis/US MNOs and Google that made it clear to many in the coalition that their grip was slipping - not because the original Isis concept had been proven invalid over 2 years, but because Isis management was trying to overreach - trying too hard to do too much with too little ability. This is not 20/20 hindsight, but just common sense. It was also common sense 5 years ago, yet unfortunately, lesser logic prevailed!

That the innovations in the mobile ecosystem have always been driven by the platform/OS providers is no secret. In the early 2000's Qualcomm called the shots. With its BREW "operating system" (or really Rex as those in the industry will correct me), and the control over the entire stack - from baseband chips to the UI - the company was able to dominate the CDMA ecosystem for more than a decade. With the advent of smartphones and "open" operating systems, pioneered by Microsoft, the pendulum was beginning to shift by 2006. Microsoft's Q smartphone was a hit globally. Neither the operators nor Qualcomm was at the forefront of the mobile "experience" - the UI/UX on the mobile devices. It was Windows Mobile, developed by Microsoft, that made the Q smartphone popular. This was before Apple/iOS and Google/Android. In fact, Windows Mobile could have easily become the Android of today. The same device manufacturers - HTC and Samsung - who trip over each other to launch the latest Android based phones, had the same rivalry using Windows Mobile. Why Microsoft/Windows Mobile could not successfully evolve into Google/Android of today is the topic of another article...

In the context of the mobile ecosystem, payments (especially contactless NFC payments) is not much different from picture messaging. This statement might make the current FinTech crowd cringe, but it's not too far from the truth. The mobile camera catalyzed picture messaging; WiFi and Bluetooth chips in phones spawned entire industries, and the NFC chip enables Apple Pay and Android Pay. Yes, Apple and Google have had as much of a leadership role in ensuring that those NFC chips stayed in mobile handsets even after the failures of Isis/Softcard caused the NFC ecosystem to go into a funk 3 years ago. However, it is the market power of their operating systems that provides them the opportunity to lead, not the power of their handset businesses.

So, on the surface, if the platform/OS is the driving force for new mobile features, it seems that Android Pay should be more successful than Apple Pay or that Apple should have called its mobile payments feature "iOS Pay". That is a very logical argument, but it's incomplete.

Firstly, Apple is Apple - no other brand generates as much emotional appeal as Apple, so it is no surprise that Apple will always have more leeway in calling the shots, even if Android Pay is exactly on par with Apple Pay or even better. In fact, Android Pay already has a perceived shortcoming of being less secure than Apple Pay, simply because of the differences in how the operating systems are managed.

Secondly, Android's strength of being more open and malleable is also its weakness. That weakness will flow into Android Pay. There will be forks in the code, and varying implementations by various device manufacturers, including custom implementations of mobile payments...not a problem that Apple Pay has to deal with.

Finally, there is no guarantee that Google will learn from its mistakes from the Google Wallet days. Even Google Wallet had a few iterations, and the later ones weren't more successful than prior attempts.

I continue to believe, as I did in 2010, that the mobile operating systems - Android, Blackberry, iOS and Windows - will ultimately hold the keys to the mobile payment kingdoms. The only question is how large those kingdoms will become. 2 of the 4 are non-existent today. In the interest of a competitive ecosystem, we need all four (and hopefully more, but not too many more) to co-exist.

However, there will be differences, and each of these platforms will have to find their niches. If Google thinks like Apple, it will fail. For example, Apple has a shot at creating an Apple branded acceptance network; Google/Android does not! Microsoft has a shot at rising from the ashes in mobile with payments as an anchor, and so does RIM.

In fact even Apple Pay could fail. Despite the momentum and the support of the Apple fan club, the numbers are still close to noise in the grand scheme of things (relative to total consumer spend). But Apple Pay and Android Pay are the best out there, and we don't want either to fail. We want them both to succeed and for several others to emulate their approach.

It's too early to say how Android Pay will do...but if Google simply tries to emulate Apple without leveraging its own unique strengths, it will fail relative to Apple!

Aditya Khurjekar


Aditya Khurjekar is CEO and founder at MEDICI (formerly LTP, Let’s Talk Payments), the trusted source for global FinTech insights and ecosystem engagement.

Previously, Aditya was a founder of Money20/20, and on the the founding team at Softcard, the mobile commerce joint venture between AT&T, T-Mobile & Verizon. Aditya also held a number of leadership positions at Verizon Wireless, CSG Systems, Lucent Technologies and Bell Laboratories.

Aditya holds an MBA in Finance & Management from New York University and an MS in Electrical Engineering. He lives in Charlotte, NC and works with teams all over the world.