Case Study – Digital Wallets on Mobile Devices: Apple and GoogleOne of the fastest-growing segments...

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Case Study – Digital Wallets on Mobile Devices: Apple and Google

One of the fastest-growing segments of the online payments business is mobile payments. U.S. mobile payments are expected to reach $140 billion by 2019 and purchases using mobile devices could account for half of all online retail sales by 2017.

Google introduced one of the first digital wallet products that would work on a mobile device in 2011 when it also introduced support for the operation of NFC chips in its Android mobile operating system. Google Wallet stores a MasterCard account for users that agree to maintain a cash balance with the card’s issuing bank, so it operates essentially as a debit card. Google Wallet does not charge a fee to merchants or the MasterCard issuing banks, nor does it charge a transaction fee. Instead, it generates revenue from advertisers who pay to display ads, offer coupons or other promotions (specific ads are displayed based on the mobile device’s proximity to the stores that are making the offers). Google Wallet has been slow to catch on with users.

In 2014, Apple introduced a digital wallet product for its mobile devices called Apple Pay. In operation, Apple Pay is similar to Google Wallet; however, the infrastructure and revenue model is different. Apple Pay charges the issuing banks a fee of 0.05 percent of the transaction amount and guarantees each transaction; that is, if the transaction is fraudulent, Apple will cover the loss. Credit card companies normally charge merchants a fee ranging between 2 and 3 percent of the transaction amount, so the additional Apple Pay fee serves as a low-priced insurance plan for them. Consumers will not be charged at all for using Apple Pay and will not be given advertising messages. Further, Apple has stated that it does not collect information about consumer buying habits from Apple Pay data. Apple arranged for American Express, Discover, MasterCard, and Visa credit cards to be included in their system, along with a group of large card-issuing banks. They also included major retailers such as Bloomingdales, Disney, Staples, Walgreens and Whole Foods. These participants will be able to collect data on consumer buying habits, but only on those consumers that use their card or shop at their stores. Apple reported that more than a million credit cards were registered with Apple Pay in the first three days it was available. After Apple Pay’s introduction, an increase in the number of retailers that accept NFC payments (as you learned in this chapter, NFC technology is used by both Google Wallet and Apple Pay) caused an increase in the use of Google Wallet.

Amy Lawrence, the owner of Random Walk Shoes, has asked you again to help her as she launches her company’s first Web site (see week 5 case study). She is interested incorporating a mobile application to her brick and mortar operation and wants your recommendation regarding credit card processing. This week’s assignment is to research Google Wallet and Apple Pay and compare the benefits and drawbacks of each from a consumer’s standpoint, a retailer’s standpoint, and a bank’s standpoint. Include why you think Google decided to develop this new product why Google also decided to continue offering its Google Wallet product. In addition, please include an explanation what a “card not present” transaction is and why it presents a greater risk than card present transactions for a retail business. Amy foresees that her business with grow into a large company, so discuss how the Electronic commerce software for a small online store must summarize sales and shipments, and contrast it with how software for a large enterprise might do so.

The following requirements must be met:

·Write between 1,000 – 1,500 words using Microsoft Word in APA 6th edition style.

·Use an appropriate number of references to support your position, and defend your arguments. The following are examples of primary and secondary sources that may be used, and non-credibleand opinion based sources that may not be used.

oPrimary sources such as government websites (United States Department of Labor - Bureau of Labor Statistics, United States Census Bureau, The World Bank), peer reviewed and scholarly journals in EBSCOhost (Grantham University Online Library) and Google Scholar.

oSecondary and credible sources such as CNN Money, The Wall Street Journal, trade journals, and publications in EBSCOhost (Grantham University Online Library).

oNon-credible and opinion based sources such as, Wikis, Yahoo Answers,eHow, blogs, etc. should not be used.

·Cite all reference material (data, dates, graphs, quotes, paraphrased statements, information, etc.) in the paper and list each source on a reference page using APA style. An overview of APA 6th edition in-text citations, formatting, reference list, and style is provided here.

Tanaya · Accepted Answer

Running Head: DIGITAL WALLETS		1
DIGITAL WALLETS		9
CASE STUDY – DIGITAL WALLETS ON MOBILE DEVICES: APPLE AND GOOGLE
Introduction
Mobile payment for any product and services has been the current technology, which the current businesses are utilizing. There are many banks who have recently taken up the technology so that they can allow the customers to carry out transaction through these mobile applications in multinational stores and retailers. Apple pay and Google Wallet are also two such mobile payment portals where the consumers can pay for products and services with the utilization of Touch ID technology. In the current study, an analysis will be done to understand the differences in the transaction process for Google Wallet and Apple pay and the way, these two different platforms can be benefitted by the consumers and retailers. 
The Benefits of Google Wallet and Apple Pay from Consumer, Retailer and Bank Standpoints
Before understanding, the origin of the Apple Pay and Google Pay and the way, it affects the consumers and the retailers it is important to have an understanding the process a contactless payment system work, based on which the two portal has been operating. According to Huh et al. (2017), in contactless payment, no sliding of the credit card is required at the POS terminal rather it utilizes the NFC technology with the implementation of RFID for communicating the payment mode through the reader and mobile device. Since some of the customers utilize mobile devices or wearable devices in carrying out the payments, hence for Apple Pay and Google wallet activates the POS terminal so that the payment can be made.
According to the researchers, the main difference between Apple Pay and Google Wallet is the size of the two technologies. Apple Pay currently has around 220,000 retail stores and restaurants with a user base of 1 million per 72 hours. As stated by Liu and Mattila (2019), Apple Pay has interoperability, which is available only in selected iPhone and iPad. These are preinstalled in the system. While in case of Google wallet user only need to download the Google Wallet in the android devices. This highlights why the adoption of Google Pay is comparatively lower compared to Apple Pay. Further, one of the important aspects of the mobile transaction is the registration of the credit cards. As observed by Gregson (2016), the uploading of the payment methods is much easier as long as the customer authorizes their credit card to be logged in iTunes. 
In the case of Google wallet, more information is required to register in the wallet. Thus, it is difficult and time-consuming in creating Google Wallet account compared to Apple Pay. Apple secures the financial data by keeping into view the payment processes and banks that are accessing the information. Thus, Apple does not pay much importance to what is shopped or bought. Therefore, there will be no prompt or advertisements. However, in the case of Google Wallet, a tokenization system is maintained so that the information of the customer is kept secure. 
Drawbacks of Google Wallet and Apple Pay from Consumer, Retailer and Bank Standpoints
One of the major challenges that are faced by the users and the retailers using the mobile payment system is the fraudulence in credit card especially during the use of Apple Pay and Google Wallet. Although, as stated by Seetharaman, Kumar, Palaniappan and Weber, (2017), both the system has robust security measures yet for the consumers and retailers the use of PIN authentication and Touch ID is one of the greatest differences in the use of their credit cards. There is a change that the credit card details may be revealed to the vendor. For Apple Pay had convinced the banks to pay a transaction fee to Apple while in case of Google no costs are charged.

Case Study – Digital Wallets on Mobile Devices: Apple and Google One of the fastest-growing segments of the online payments business is mobile payments. U.S. mobile payments are expected to reach $140...

Case Study – Digital Wallets on Mobile Devices: Apple and Google

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