With Apple Pay crushing the Google Wallet by a country mile and Samsung announcing that their Galaxy S6 smartphones will use their newly acquired LoopPay, Google was feeling a little out of the loop. Earlier today at the Mobile World Congress trade show, Google's Sundar Pichai, a Senior Vice President at Google who oversees Android, Chrome, and Google Apps, announced that they're working on Android Pay.

Although Google's announcements was somewhat expected, GSMArena.com reported today that "there are a lot of security concerns with this plan and Sundar did manage to mitigate some of them in the interview. Open-source and Android API spell trouble in a lot of people's minds, but what Google intends to do is employ modern techniques, such as one-time security tokens to authorize payments. What this means is that if a transaction gets compromised by a third person, the offender will only get access to a one-time token that can't be used to carry out a further payments. This is a pretty standard approach, but does not answer all of the security concerns, mainly what happens if you lose your phone, or even worse, what could a potentially malicious piece of software do with your bank information without your knowledge."

The report further noted that 'This new Android endeavor will not affect Google Wallet, which has been around for quite some time and is enjoying formidable popularity and is also the main payment gate for most of Google's paid services, including the Play Store. That system is absolutely different in what it does and might even be complimented by the new Android Pay API.

No information on availability was disclosed during the interview, but Android users and developers can look forward to the new functionality and we are sure to find out more at Google I/O in May."

Last week Cherian Abraham of DROP Labs, a mobile payments/commerce strategy & advisory practice focused on banking & retail wrote about his thoughts on Samsung's LoopPay acquisition worth passing along.

Abraham noted in his blog that he worried that the acquisition relayed a scattered strategy on Samsung's part which stood in stark contrast to the military discipline exhibited by Apple's own Apple Pay. "Via Loop – Samsung is investing more on grabbing upfront a larger share of a shrinking pie vs Apple's dominance of a growing one. And Loop's share inevitably will shrink, and unless Samsung balances it with a broader identity and commerce strategy it risks getting a short term boost and little else."

Abraham further noted that "Chase is rumored to be the largest issuer to sign-on with Samsung/Loop Pay – and that issuer partnership is necessary beyond tokenization reasons alone. Loop has to 'downgrade' a card when presented to an EMV terminal by altering the mag-stripe service code so that the terminal does not challenge the swipe and force a dip. Between that, and the general unwillingness to fork over your brand to be wrapped by a much lesser known entity, will keep some issuers on the bench.

Whether you agree that it should or not, TouchID has become the de facto authentication approach, Passbook is becoming the choice off-property transaction and loyalty store, and Secure Enclave/SE has all the making of a secure identity store.

All the interesting bits around payments are being solved by Apple without having to be burdened by becoming regulated or being a bank. This is one trait Samsung should not hesitate to copy."

Clearly Apple's new Apple Pay is taking the market by storm and the fear of Apple running away with this key market has their competitors frantically scrambling to at least look good on paper while Apple keeps making real-world strides. In January during Apple's Financial Conference Call, Apple's CEO noted that Apple pay was off to very fast start with over 750 banks and credit unions signed on to bring Apple Pay to their customers.

He further noted that after 3 months since its launch, Apple Pay makes up more than 2 out 3 dollars spent on purchases using contactless payment across the three major U.S. card networks. With merchants who already use Apple Pay the rates are even higher. Cook concluded that "2015 will be the Year of Apple Pay." Yes, no wonder the competition is racing like wind to catch up.

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