Payments Blog • 3 MIN READ

The Battle for your Virtual Wallet

John Dunne

Written by John Dunne

PayPal, Apple Pay, and Google Wallet are three behemoths vying to be the service you choose as your virtual wallet. What are the differences between each service, and which one is the most promising? Let's take a look.

PayPal was the first of these companies that emerged in the online payment space. They serve as a middleman between the buyer and seller to make transactions safe and secure. Users first store their banking or credit card information within PayPal. The service can then be used to make payments to others without having to divulge any personal information. PayPal's strength is providing a trusted platform for consumer-to-consumer and consumer-to-business payments.

Google Wallet is a relative newcomer whose goal is to import your credit card into mobile devices equipped with a Near-Field Communication, or NFC, chip. Users are able to make payments with their mobile device wherever NFC-enabled point of sale terminals are available. As it turns out, there isn't a significant added value with the platform. While Google Wallet can be used for online transactions as well, there is nothing that really sets the service apart from its competitors.

The newest competitor in the marketplace is Apple Pay. Apple's strategy with Apple Pay was to bring the whole payment ecosystem along for the ride. Rather than just importing users' credit cards into a virtual wallet, the platform is more secure thanks to tokenized transactions. It's a very powerful play to integrate the entire credit card ecosystem, including the issuing banks and merchants. It's worth noting that while PayPal and Google Wallet have cross-platform applications and support, Apple Pay is only available on the iPhone and Apple Watch.

As we look at all three of these platforms, there are varying degrees of growth and satisfaction. 451 Research's ChangeWave Mobile Payments Trends took a three-month survey of 4,168 respondents. Ending in March of this year, the respondents answered various questions about their mobile payment usage patterns. In a five-point scale indicating satisfaction, 66% of Apple Pay users said they were 'very satisfied'. That's in stark contrast to 45% of PayPal users and 33% of Google Wallet users.

What's in store for these three behemoths in the future? Apple Pay will probably continue to embrace its strengths. The service has rolled out across 200 banks in the US alone. The latest figures say that Apple has sold a record-breaking 74½ million iPhones in the last quarter. To put that number into perspective, the previous largest quarter was a year ago when 51 million units were sold. That's almost a 50% uptick in the number of people purchasing devices that happen to be Apple Pay enabled.

Google Wallet really needs to find a way to become relevant in the payment ecosystem. At the moment, they are just another alternative for making mobile and web-based payments. There isn't any added benefit of security or convenience that would motivate an end user to choose Google Wallet over its competitors. Additionally, users might not be comfortable knowing that Google wants to collect their spending data. Google needs to take a good look at what they can offer to both consumers and merchants to drive satisfaction. The company should place a focus on security, convenience, and privacy.

At the end of the day, PayPal, Google Wallet, and Apple Pay still have much room for improvement. Time will tell which platform can cement its place as the choice for both consumers and merchants, meanwhile, the battle is well and truly on for your virtual wallet. Who do you think will win and why?

Topics: Payments

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