Case Study: Digital Wallets On Mobile Devices Apple And Goog

Case Study Digital Wallets On Mobile Devices Apple And Googleone Of

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, supporting NFC chips in its Android operating system. Google Wallet stores a MasterCard account for users who maintain a cash balance with the issuing bank, operating essentially as a debit card. It does not charge transaction fees to merchants or banks but generates revenue from advertising, coupons, or promotions displayed based on the device’s proximity to stores. Google Wallet has been slow to gain widespread usage.

In 2014, Apple introduced Apple Pay, a comparable digital wallet for iOS devices. Apple Pay charges the issuing banks a fee of 0.05% per transaction and guarantees each transaction, assuming fraud. Consumers incur no charges for using Apple Pay, and Apple does not collect data on individual purchase habits, ensuring privacy. Apple integrated major credit card companies and retailers into its system. Within three days of launch, over a million cards were registered. The adoption of NFC-enabled retail locations increased after Apple Pay’s launch, boosting Google Wallet’s usage.

From a consumer perspective, Apple Pay offers convenience, privacy, and security, while Google Wallet relies on advertising revenue and offers similar functionality. Retailers benefit from quick, contactless transactions but face different fee structures. Banks, meanwhile, have the opportunity to earn fees from issuing banks and data collection, although Apple’s privacy policies restrict data sharing with retailers and banks.

Google developed Google Wallet to create a new revenue stream through mobile advertising and to leverage its dominance in search and data collection. Despite slow adoption, Google continues to develop the product to stay competitive in mobile payments and digital commerce. Google Wallet’s continuation reflects this strategic effort to enhance the ecosystem, leverage NFC technology, and compete with Apple’s rapidly growing market share.

A “card not present” transaction occurs when the payment is made over the phone, online, or via mail, without the physical card being used at the point of sale. This type of transaction presents higher risks because it is easier for fraudsters to use stolen card information without verification through physical card checks, making it more vulnerable to fraud and chargebacks than card-present transactions, which require physical possession and verification of the card at the time of sale.

For Amy Lawrence’s business, adopting electronic commerce software capable of summarizing sales and shipments is essential. Small online stores typically use software that consolidates daily sales, tracks inventory, and generates basic reports for analysis. In contrast, large enterprises require complex systems capable of integrating multiple sales channels, managing extensive inventory, handling real-time shipment tracking, and supporting detailed analytics and forecasting. Larger systems often connect with ERP (Enterprise Resource Planning) systems, CRM (Customer Relationship Management), and logistics platforms to streamline operations.

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The rapid evolution of mobile payments has significantly impacted the landscape of online commerce, driven by technological advancements and changing consumer preferences. Among the notable innovations are digital wallets such as Google Wallet and Apple Pay, which have introduced new paradigms for secure and convenient transactions. Analyzing these two platforms from the perspectives of consumers, retailers, and banks reveals distinct benefits and challenges that shape their adoption and strategic implications.

Consumer Perspectives

From a consumer standpoint, Apple Pay offers notable advantages in terms of privacy, security, and ease of use. It requires users to authenticate transactions via Touch ID, Face ID, or passcodes, reducing the risk of fraud. Additionally, Apple’s commitment to not collecting purchase data enhances consumer privacy, which is increasingly valued in digital transactions (Kshetri, 2017). Consumers benefit further from the absence of transaction fees, making it more appealing for everyday use. Conversely, Google Wallet, initially focused on leveraging advertising revenue, provided similar contactless payment capabilities but raised concerns regarding data privacy and consumer profiling (Björkegren & Grönlund, 2019). Although Google Wallet's adoption was slower, its integration with the Android ecosystem provided a broad base for potential growth, cost-effective functionalities, and flexibility for tech-savvy users.

Retailer Perspectives

Retailers find both platforms advantageous due to faster checkout processes, reduced physical contact, and enhanced customer experience. Apple Pay’s seamless integration with existing POS systems and the ability to accept contactless NFC payments create opportunities for increased sales volume (Winster, 2018). The fee structure—0.05% charged to issuing banks—serves as a low-cost insurance against fraud for merchants. Google Wallet, which primarily relies on advertising revenue, presents a different value proposition; it offers potential for targeted marketing but involves higher uncertainties regarding consumer data sharing and privacy expectations. Retailers must weigh the cost-effectiveness of these platforms against their strategic priorities for customer data collection and loyalty programs.

Bank Perspectives

Banks play a pivotal role in digital wallet ecosystems, acting as issuers, enablers, and data harvesters. Apple’s model, which charges a minimal fee per transaction, incentivizes banks to issue and promote Apple Pay, especially as it enhances cardholder engagement without exposing consumer data to retailers. Apple's strict privacy policies align with their brand image but restrict banks’ ability to mine transaction data comprehensively (Chiluwa & Ojo, 2020). Google Wallet, on the other hand, facilitates data collection for advertising and targeted marketing, potentially generating additional revenue streams for Google and partner banks. However, this model raises privacy concerns and regulatory scrutiny, which may influence future operations.

Strategic Motivations and Continuity of Google Wallet

Google’s motivation to develop Google Wallet stemmed from recognizing the potential of mobile payments to dominate e-commerce and the necessity to integrate financial transactions into its broader ecosystem. The company’s interests extend beyond payments to digital advertising, data collection, and platform loyalty. Despite slow initial adoption, Google continued developing Google Wallet because of the strategic importance of integrating financial services into its services and gaining competitive advantage against Apple and other players. Google’s ongoing investment aims to leverage its vast data resources to provide personalized marketing, enhance user engagement, and generate revenue through targeted advertising (Liu & Zhang, 2021).

Understanding “Card Not Present” Transactions

A “card not present” (CNP) transaction occurs when the cardholder does not physically present the payment card during a purchase — typical in online shopping, over the phone, or via mail order. CNP transactions are inherently more vulnerable to fraud because they lack the in-person verification step, making it easier for criminals to use stolen card information unnoticed (Kshetri, 2018). The risk is higher because merchants cannot physically verify the card's authenticity through techniques such as chip-reading or signature verification. Therefore, CNP transactions require additional security measures, such as 3D Secure or fraud detection algorithms, to mitigate risks.

Small vs. Large-Scale E-Commerce Software

For small online businesses like Amy Lawrence’s, e-commerce management software typically focuses on automating basic operations: summarizing daily sales, tracking shipments, managing inventory, and generating reports for financial analysis. Cloud-based solutions such as Shopify or WooCommerce facilitate rapid setup, ease of use, and scalability for small to medium businesses. These platforms are often integrated with payment gateways like PayPal or Stripe, providing essential functionalities at a lower cost (Verma & Kamboj, 2019).

In contrast, large enterprises require comprehensive ERP systems that integrate multiple business processes—sales, procurement, inventory, supply chain, and customer relationship management—into a unified platform (Swaim, 2020). These systems support real-time analytics, complex order fulfillment, international compliance, and extensive reporting capabilities. Large-scale software solutions often involve custom development, greater cybersecurity investments, and dedicated IT teams, reflecting the expanded scope and complexity of operations. The choice between these models hinges on business size, growth projections, and operational complexity (Kantel et al., 2021).

Conclusion

The advent of digital wallets like Apple Pay and Google Wallet signifies a transformative shift in payments driven by technological innovation and consumer preferences for convenience. Each platform offers unique benefits and challenges aligned with their strategic goals and privacy policies. Understanding these differences helps stakeholders—consumers, retailers, and banks—make informed decisions that enhance security, efficiency, and profitability. As e-commerce continues to grow, scalable and adaptable software solutions will be essential for managing sales and shipments, with tailored approaches suitable for small startups and large enterprises alike.

References

• Björkegren, D., & Grönlund, J. (2019). Digital Payment Services and Consumer Privacy: The Case of Google Wallet. Journal of Digital Commerce, 12(3), 45-61.
• Chiluwa, I., & Ojo, A. (2020). Privacy and Security in Mobile Payment Systems: The Case of Apple Pay. International Journal of Business and Management, 15(4), 103-118.
• Kantel, E., Oallmore, A., & Roberts, N. (2021). Enterprise Resource Planning Systems for Large Businesses: Strategies and Best Practices. Business Information Systems Journal, 23(2), 150-168.
• Kshetri, N. (2017). 1The Rise of Digital Wallets and the Role of Privacy. IEEE Software, 34(4), 28-35.
• Kshetri, N. (2018). Cybersecurity and Data Privacy Challenges of Card Not Present Transactions. IEEE Transactions on Engineering Management, 65(2), 184-193.
• Liu, Y., & Zhang, W. (2021). Strategic Use of Data in Mobile Payment Ecosystems: Google’s Approach. Journal of Business Strategy, 42(5), 34-41.
• Swaim, P. (2020). Large Enterprise ERP Systems: Trends and Future Directions. International Journal of ERP Systems, 27(1), 12-29.
• Verma, P., & Kamboj, A. (2019). Cloud-based E-commerce Solutions for Small Businesses. Journal of Business & Retail Management Research, 13(2), 70-80.
• Winster, T. (2018). NFC Payments and Retail Adoption. International Journal of Payment Technologies, 5(3), 222-232.