Many of the major tech companies in the U.S. are currently working to add payments technology to their portfolios. What these companies -- including Amazon, Apple and Google -- bring to the table is a large cohort of customers who already rely on their services. If consumers already trust Amazon with their purchases and Google with their online identities, it's not a big leap to trust them with payments. These companies and a few other notables are poised to become active players in this rapidly evolving space.
Of course, these companies weren't originally founded as payment gateways or mobile wallet providers. They are complex organizations with diverse offerings, and they seem to understand that the value of entering the payments space actually has little to do with payments. It's all about customer data and the ways it can be used to market and reach customers more effectively.
While it might be tempting to think that one of these tech giants will eventually take home the payments gold, we believe this space is simply too large for just a single player to win. But it's a hot space, and one worth keeping an eye on. Here’s where the major players stand now, the payments-related products they offer and their unique advantages:
Strategy: Amazon recently announced Amazon Payments, which will allow users to make transactions using their Amazon account on any participating website. Amazon also announced the Fire Phone, a smartphone that lets users to scan items in the real world and immediately purchase them via the phone. This could redefine "showrooming" in a big way.
Differentiators: Amazon’s online retail services constitute one of the most valuable offerings of any tech company, and its stock is hot enough to prove it. Consumers trust Amazon to deliver the products they want quickly and efficiently, and to recommend other products that they will enjoy. This level of personalization and high quality of customer service has earned the tech company a reputation that it will be able to parlay into payments technology beyond its own site pretty seamlessly.
Strategy: Through iTunes, Apple has processed billions of transactions, including everything from songs to movies to mobile apps. While the tech giant has been publicly quiet on the payments front, they have been quietly hiring executives with experience in the industry. Plus, at their June 2014 Worldwide Developers Conference (WWDC), Apple announced that it would extend its Touch ID API technology for third-party apps. This will almost certainly be used to process secure mobile transactions in some form or another.
Differentiators: Like Amazon, Apple has the consumer on its side. Moreover, Apple already owns the infrastructure needed to process payments quickly and simply for consumers via iTunes. If other online and in-store retailers are open to partnering with Apple to allow consumers to pay for items with their iTunes accounts (perhaps using Touch ID), then Apple could instantly become a giant in the payments space.
Strategy: It's no secret that Google has been building its Wallet for some time now, but lately they've been exploring how to turn the product into a robust offering for businesses. Now, in addition to allowing customers to pay via Google Wallet, the service will allow businesses to combine offers and loyalty seamlessly within the application.
Differentiators: Google has a big enough footprint to make inroads with both businesses and consumers. Moreover, the platform focuses less on the novelty of paying with a phone and more on the offers, discounts and loyalty programs that will drive business for merchants. However, in order to succeed, Google (and Apple as well, for that matter) will need more access to merchant countertops. Whether they will succeed in attracting these customers depends largely on how willing they are to shape their products around this unique customer/business dynamic.