Will Apple Pay BEAT Ali Pay?
Apple just released the new Apple Pay as their secret weapon in 2014. At the same time, AliPay in China and PayPal international have already shared large volume of internet purchasing since the 21 century.
Will Apple get the benfit from this war? Or Ali Pay will be threatened by this strong competitor?
Apple Pay went live this week, casting a shadow over the future of cash and credit cards—and of two young companies called Coin and Plastc.
Buoyed by strong iPhone sales, Apple Pay allows users to make purchases with recent iPhones at more than 220,000 merchant locations across the U.S. The company says the new service will make it safer and easier for consumers to pay, without carrying physical credit cards.
This poses a bit of a challenge for Coin and Plastc, which also aim to make payment safer and easier—but by consolidating users’ credit-card information on a single, physical smart card.
“I’d be very surprised if those guys didn’t feel like a tornado just entered their world,” said Rich Aberman, chief product officer at WePay, a payment-processing company in Silicon Valley.
The Coin and Plastc cards aren’t yet widely available.
Coin, which users can pre-order for $100 from the San Francisco company, looks much like a credit card. However, it is powered by a thin battery with a two-year lifespan.
Users upload their account information to the device via a mobile app. The service has been available for a limited number of users in beta since earlier this year. The company says it is backed by Y Combinator, K9 Ventures and a group of individual investors including employees of Square, Google GOOGL +1.06% Wallet and Goldman Sachs GS +1.32%.
Plastc offers a similar product on preorder for $155. The Palo Alto company plans to ship cards in the summer of 2015.
Nghi Cao, a 32-year-old from San Jose, Calif., says she preordered a Coin right when they were announced, excited that she might be able to reduce the number of cards she carried to just one.
Yet months passed, and the product never arrived. Coin began taking preorders in November of 2013, but has faced delays since. (The website says current preorders will start shipping in the summer of 2015.)
So when Ms. Cao heard about the companies lining up with Apple—including J.P. Morgan Chase JPM +2.30%, Bank of America and American Express AXP +1.94%—she decided to cancel her longstanding Coin order and give Apple Pay a try instead.
“I felt kind of bad,” she says. “But it’s just one less thing for me to carry.”
Some analysts say it is still too early to count Coin or Plastc out.
A customer uses Apple Pay on the iPhone 6 to make a MasterCard purchase at Walgreens in New York on Monday.
AP Images for MasterCard
“Don’t go throwing away your physical wallet yet,” said Allen Weinberg, managing partner and co-founder of Glenbrook, a payments-industry consulting and research firm.
Mr. Weinberg says it will take some time for retailers to adopt the technology needed to receive mobile-payment transactions from the likes of Apple Pay or related service Google Wallet, which both use near-field communication, or NFC, to transmit payment information through a narrow radio frequency.
By contrast, with Coin and Plastc, you swipe the card just like you would a regular credit card.
The companies take a similar view.
“Coin aims to provide ubiquity in paying anywhere, not just at specific NFC-enabled locations supported by Apple Pay and iOS,” Kanishk Parashar, founder and chief executive of Coin said in a statement.
Ryan Marquis, chief operating officer of Plastc, says that people still like cards and that it is just too early to think consumers will move over to phone-based payment so soon. A bridge technology such as Plastc is needed, he says.
Tasso Roumeliotis, founder of mobile-security app Location Labs, says the future will be decided by market share.
If the market share of iPhone devices moves above 70%, Apple Pay will dominate, he says. If market share hovers around 50%, there will be room for other services, such as Plastc and Coin, he says.