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OEM Pay Vs Issuer Pay:

OEM Pay Vs Issuer Pay:


Abdullah Abdelkafi


03 Mar 2020

Read time

7 minutes



OEM pay – a lesser-known acronym that stands for ‘original equipment manufacturer’ – and its native payment methods, are perhaps better understood if I simply said ‘Apple Pay’.

What OEM pay is not, however is AliPay, but what it is – is Google Pay.

Confused? Rightly so.

The difference between payment wallets such as Apple Pay and AliPay is that one is native to the device and the other is installed onto it; OEM versus Issuer.

Where Google Pay blurs the line is that whilst it is present on most Android phones because it was formerly named Android Pay until 2018 (and thus was an OEM payment method), Samsung Pay is also a proprietary payment method that uses android technology.

What is the true difference?

The true differentiator between these services, however, is in the number of payments they can facilitate and how the user experience differentiates depending on that.

Whilst we’ve touched upon OEM payment methods being device owned and pre installed, they’re typically facilitating payments using NFC technology – aka contactless payments. Samsung Pay differs again however, by using MST (magnetic secure transmission) to mimic MagSwipe technology at a payment terminal.

However, Issuer payment methods such as Alipay will belong to a brand and due to the restrictions upheld by iOS devices that prohibit any non-native wallet to utilise the NFC chip; this showed a rise in QR code and barcode use in Issuer payment methods.

The only exception to this rule has been through Mastercard’s masterpass wallet – which can be used on iOS devices through NFC terminals. Issuer Pay apps can also utilise NFC codes on Android devices.
Equally, the NFC chip does not have not have the same popularity worldwide as it does in western markets.
Where cash had always been king and credit had never made into the transitional intersection of the evolution of the payments in Asia; Asian markets vastly preferred using e-wallet’s omnichannel capabilities through the easy integration of QR codes for some time now – long before NFC chips rose to mainstream popularity; just like they did in 2008 in the UK.

Whilst e-wallet use in Asia leads above cash and card with a 52% share, this is only expected to increase by 10% within the next 2 years; especially as NFC technology takes up some of the QR market space and other Asian offerings like Huawei join Alipay and WeChat Pay in offering a global payments service.

So whilst OEM pay is native and has more authority over a phone’s NFC chip both at iOS and Android at this point, there is a certain power they hold in being able to hold multiple digitised versions of payment cards for consumers, despite discarding a tailored and branded experience to a customer user base as a result.

An Issuer pay app, in a more localised sense, will in most cases hold just one payment type, but is considerably more immersive to the customer in branding and connecting into cross-selling schemes that serve multifunction purposes.

However, at the end of the day, the general discussion on e-wallets and contactless payments has been to make payments easier and quicker – so we ask:

Do we want to expand that?

Are issuer pay models truly contactless?

Whilst the success of AliPay is undeniable with 60.5% of China’s population estimated to be using the service by 2023, the success of Apple Pay is bigger.

With a certain proprietary hold yet to be dismissed as a variable in this, it is still estimated that 1 in 2 OEM payments by 2024 will be made by Apple Pay as it expands its market offering, with a total 10% of all global card payments being made at both Web and POS by the service.

Whilst contactless payments can be defined as a ‘tap and go’ method of payment there is arguably more friction in the payment process when you can’t use NFC or MST technology with issuer pay apps.

In using OEM apps that are native, the same native NFC technology within a customer’s device knows when an NFC reader is near and payment can be made without opening the app.
This is not the case for the majority of issuer pay apps, that will need to be opened and presented to a barcode or QR scanner. This is technology that is not often conveniently placed on self-service scanners.

This is an entirely different story in Asia. As mentioned, the journey to contactless payments happened more rapidly and a lot earlier, with QR code readers becoming the cheaper option within a society that demanding a self-service option for their contactless payments a lot earlier than the west.
Despite the popularity of Apple Pay’s and Google Pay’s ability to cater to NFC terminals in the west, self-service QR code readers currently cater to 70% of the Chinese mobile payment device market.

Issuer pay wallets also have their benefits in catering to tourism and international markets abroad, as well as inherently leaning into a design that rewards customers with cross-channel marketing and loyalty schemes.

Alternatively, in terms of a frictionless experience, Apple and Android are dominating the market online and at point of sale for the most seamless experience; even with Asia’s narrative in payments – the time for global NFC facilitation is forthcoming.

Nevertheless, both OEM payment apps and Issuer pay apps are increasing in value with the rise of open banking regulations – and with this same implication of choice for consumers, the same should be for how we pay and not just who we pay with.

Additionally, the scope is only set to broaden in what Issuer pay applications can offer us. Though Masterpass is mainly offered as an affiliation app, the Mastercard owned wallet can actually accept schemes from AMEX and Visa amongst other major card schemes.

The Future of Payments:

Currently, the future seems brighter for OEM pay. Though we’re a nation quick to criticise the rapid pace at which Apple issues devices, its fintech has a stronger hold alongside the likes of Google Pay and Samsung pay, with each of these OEM methods serving anywhere from 25 to 85 million users at its current pace.

With a 95% rise in contactless payments, the west is nearing the east in e-wallet usage, discarding the physical card for a digitised, secure a tokenized version of their plastic with 42% of UK millennials preferring to use their phone to make payments.

With minimal options, OEM pay serves its purpose by consolidating all cards in one place; allowing you to choose a preferred payment method and support omni-channel payments with the likes of Apple and Google Pay. With Issuer pay, your options whilst branded, are usually limited to one – or limited more so than that of an OEM pay service – by your brand’s scope and regionality.

By 2020, contactless payments will account for a third of global transactions, with OEM payments catering to a tune of $300bn USD contactless in-store transactions (15%). This same year, 450bn transactions will have been made via OEM payments; with Apple Pay accounting for 1 in 2 of these. As mentioned, new competitors to the market are expected to be Huawei Pay alongside Fitbit pay.

Whilst new payment regulations surrounding strong customer authentication evening the playing field for payment services everywhere; OEM pay still holds power in proprietary assets giving itself a head start in the payments space; allowing brands like Apple and Google to scale their options alongside their devices. With this scalability, NFC needn’t be seen as the more expensive option across asia, because it’ll be a necessary option if these conglomerates have any sway over the situation.

The Future of Issuer Pay wallets isn’t dim, but there’s a lot to consider:

Should popular asian wallets such as AliPay facilitate NFC or MST technology if Apple lifts their proprietary hold?

Would other Issuer wallets be transitioning into a more ‘blind payments’ scheme in doing the same; forsaking cross-channel marketing in further minimising the payment process?

There is room to consider whether OEM pay and Issuer payments can be combined. Moreover, we should consider whether Issuer payments will consider themselves exclusive to their own services, or expand themselves into OEM pay apps for the sake of consumer convenience and retention. as Apple Pay continues to dominate amongst all others in the future of payments.

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