How Google is battling Apple beyond mobile payments

The competition among mobile wallet apps increasingly involves supporting functions besides checkout, leading to a series of aggressive rollouts from both Google and Apple. 

Google Pay, for example, has made several updates, expanding how consumers consider incentive marketing offers, access buy now/pay later lending and use biometric authentication. Rival Apple Pay has added a collaboration with embedded payment firm Exactly to make it easier for merchants to access Apple’s digital wallet, which the company is using as part of its long-term financial “super app” strategy. 

“The key areas we’re looking at are security, ease use and enabling access to tools that optimize purchases and payment methods,” said Ben Volk, a vice president and general manager at Google Pay.

As Apple and Google build financial services, they’re also battling lawsuits and regulators in addition to competitors. 

Both Apple and Google have faced legal challenges to their payment policies, facing accusations that they are impeding competition. In the European Union, regulators have required Apple to open access to the NFC chip on iPhones to other mobile wallets. That could offer an opportunity for Google to compete with Apple on Apple devices, said Aaron McPherson, principal at AFM Consulting. 

Google did not comment on regulatory or legal issues. Apple, which has also developed a BNPL product, did not provide comment for this article by deadline. 

Rewards and loans

In an effort to lure consumers by making it easier to optimize incentives, Google is using its search-engine technology to enable consumers to sift through different card marketing offers to determine which reward program provides the most benefits for a specific purchase. American Express and Capital One are the initial users, with Google saying it intends to add more cards.

Attracting more banks may be a challenge. While consumers digest rewards information and decide on which card to use, Google’s move is a step towards the wallet suggesting which card would be best for the customer, said Zil Bareisis, a director at Celent. 

“However, the fact that it’s being launched with only two issuers, Amex and Capital One, implies that the issuers have to opt-in to offering this feature. It will be interesting how many of them will decide to participate,” Bareisis said. 

Digital wallets have always offered a choice of funding methods, but until now there was no way to compare them in terms of benefits, according to McPherson. 

“This is a significant advance,” McPherson said. “The addition of BNPL in the wallet is also a major convenience, because it consolidates what used to be a separate option at the checkout page. I expect that the choices will expand in the future.”

Buy now, (Google) pay later

Google has taken a buy now/pay later program out of pilot. Consumers have the option of tapping “GPay, Pay Later” when making an e-commerce purchase, and are shown options from Affirm and Zip. 

BNPL has become more popular in recent years across a wider range of consumers. But it is also controversial, and is under pressure from regulators such as the Consumer Financial Protection agency, which plans to require BNPL lenders to follow the same rules as credit card issuers. Google, which did not comment on BNPL regulations, categorized its BNPL support as a way to meet a greater range of consumers.  

“Our decision to partner with BNPL providers was based on user needs and preferences,”  Volk said. “It seems to be very popular for large-ticket items.” 

By pursuing installment lending, the digital wallets can own the entire BNPL relationship separate from the merchant, said Aaron Press, research director of worldwide payment strategies at IDC. 

“Apple and PayPal, for example, offer their own BNPL options in their respective wallets, and consumers can choose them from there as long as the merchant has integrated the wallet,” Press said. “In that scenario, the merchant wouldn’t even know that the customer had opted for a BNPL solution. This takes some control away from the merchants.”

Apple is pursuing BNPL through its Apple Pay Later product, which offers lending spread over four payments over six weeks with no interest. McPherson said another large technology firm to watch in the BNPL market is PayPal, which has for many years had a quick financing option in the form of PayPal Credit, and recently added a BNPL-like capability called Pay in 4. 

“PayPal could potentially match this sort of intelligence about the payment option,” McPherson said. 

Pushing its buttons

Security is also a large part of Google Pay’s upgrades. The technology giant introduced an option that automatically fills card details using the same process consumers use to unlock devices. By using a fingerprint, face scan or PIN, shoppers can avoid additional security codes. Users can also unlock devices before revealing card details, shutting out other users who have access to that device. 

“We see this as a way to gain trust with users,” Volk said. “If we can direct them to different services it reduces complexity in their eyes.”

Other Google Pay upgrades, which are still pending, will be aimed at developers. The Google Pay button will be expanded to include card art and the name of the issuer, which is designed to make the issuer’s brand more visible. The technology company is also upgrading its application programming interface to make it easier for developers to test and design payment buttons. 

These recent updates and projects in development follow an earlier series of Google Pay deployments in 2023 that made virtual cards available to American Express, Capital One and other issuers. This enables cards to be used online through Chrome Autofill, which digitally populates checkout pages and uses tokens in place of card numbers to mitigate theft. Google’s payments-related businesses have undergone a restructuring in recent years, with Google Wallet serving as a place to store credentials for transit, health care and other similar relationships. Google Pay is the primary app for transactions. 

“Wallets of this type aren’t just a mobile concept. They are designed to streamline checkout and payment in any channel,” said Press. “In fact, one of the Google features mentioned in the blog post, (card benefits), is currently exclusive to desktop Chrome.”