Can a phone replace your wallet? I went shopping to find out.

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Apple Pay vs. Google Wallet vs. PayPal

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It’s undeniable — Apple Pay will be the thing that finally makes mobile payments go mainstream. But it’s not the only option. Google and PayPal are also major players, but if their real-world success rates to date are any indication of Apple Pay’s reception, it’s best we keep a tight grip on those leather wallets.

To better understand the mobile payments landscape, I did something most smartphone owners have yet to do: buy things at brick-and-mortar stores using a phone.

It turns out that while we might be cozying up to the idea of replacing our wallets with phones, the retailers are not. Google Wallet, PayPal, and Apple Pay are all mobile payment leaders with substantial clout, but even they struggle to get merchants to invest in the tech that enables tap-to-pay transactions.

There’s also SoftCard, a mobile payments solution from AT&T Mobility, T-Mobile, and Verizon. Softcard never quite penetrated, however, and dealt with a name change after its original name, ISIS, ended up being the focus of something entirely different.

Still, it’s a battle worth fighting. Mobile payments offer layers of security unmatched by mag stripe cards, seriously reducing the instance of the sort of credit card fraud that now seems to be a weekly occurrence (see Target, Home Depot, Michaels, — just in past few months alone).

Apple Pay

Just an hour after installing iOS 8.1 (which enables Apple Pay) I hit New York’s pavement ready to meet the cashier who will have no idea why I’m pumped to be spending my money. That excitement quickly dies down, however, when I realize that across the street is a mom-and-pop bagel shop (they’re everywhere in New York) and a flower store.

I finally take a cab to Whole Foods, an Apple Pay launch partner that assured me they’d support Apple Pay the moment it launched. They were right. And the transaction went off without a hitch.

Once my purchase was totaled, I tapped my iPhone to the credit card terminal, and the screen lit up. At that point, I selected the credit card I wanted to use, scanned my fingerprint, and — beep — the transaction was complete.

More on Apple Pay

Where Apple Pay wins

If the iPhone 6 and 6 Plus do one thing exquisitely well, it’s pay for stuff. Transactions take seconds to complete. For those who habitually dig their wallet out of a bag, the process will feel especially brief.

Apple Pay’s greatest asset is security. When you register a card with Apple Pay, its 16-digit number is not stored in the device. Instead, your iPhone pings a company like First Data to trade the card’s real number for an alias — called a “token.” That token, a devalued 16-digit number, is stored in an iPhone chip called the Secure Element.

Then, whenever you make a purchase, your phone sends the merchant the token instead of your actual 16-digit number. The *only* way to access that token is by scanning your fingerprint. The result? Three layers of security that greatly reduce the instance of fraud.

It’s also worth noting that Apple promises never to keep track of your payment activity. However, that doesn’t stop retailers from tracking you on their own, either through their Point of Sale system or loyalty program.

Where it lacks

220,000 merchants. That’s the number of retail stores that currently sport Apple Pay-ready Point of Sale systems. It sounds like a lot, but in reality, that’s just a small percentage of retail and food establishments in the United States.

And there’s no way around it: you’ll need an iPhone 6 or 6 Plus to use Apple Pay for in-store purchases. Eventually, iPhone 5S, 5C, and 5 users will be able to use the Apple Watch to enable Apple Pay.

Google Wallet

I’m at the cash register at Benefit Cosmetics in Bloomingdale’s, a Google Wallet launch partner. The make-up artist is briefing me on their new cheerleader-themed blush, because he has no idea I’m on a mission to buy the cheapest thing they’ve got using Google Wallet. I excitedly tell him I’m paying with my phone, and in an unsurprising twist, he says, “How?”

It actually doesn’t matter so much that the Benefit employee wasn’t aware of Google Wallet or Apple Pay — the credit card terminal functions without any employee intervention. The blatant lack of awareness, however, reaffirmed my hunch that Google did a pretty lackluster job marketing their product. Plus, it’s likely merchants don’t bother training their employees on mobile payment methods.

Despite the lack of awareness, Google Wallet works, and it’s awesome. I unlock the phone, tap it to the terminal, enter my Wallet PIN, and complete the transaction as usual.

A day in the life of a Google Wallet user (photos)

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Where Google Wallet wins

It took three years of breaking and rebuilding, but Google’s mobile payment method is finally a thing many Android owners can actually use. And although it may not have Apple Pay’s new-car smell, it’s just as functional.

Like Apple Pay, Google Wallet leverages tokenization — your real 16-digit card number is never exposed to merchants. But instead of securing the token in a chip, Google uses something called Host Card Emulation (HCE), which functions a lot like a Secure Element chip, except it lives virtually in the cloud.

With this cloud-based approach, Wallet can be compatible with any NFC-equipped Android phone. The app also lets you store club cards and gift cards, earning the “wallet” name more than any other mobile payment option.

Wallet needs more work

Despite Google’s influence, the company never succeeded in significantly increasing the number of merchants that support NFC payments, even three years after launching Wallet. Though I was always ready to pay using my Android phone, I was surprised to find that so few merchants actually support the technology. (It’s worth noting that, generally, Google Wallet works wherever Apple Pay works.)

Wallet falls the hardest is with device compatibility. In order to use Wallet in stores, you’ll need an NFC-capable phone running Android 4.4 KitKat or later. Even a year after launch, KitKat is only on 25 percent of Android phones.

Though Wallet utilizes tokenization, HCE complicates things. For starters, you’ll need cell service to use Google Wallet, since the phone needs to retrieve tokens from the cloud. Plus, anything that operates in the cloud — instead of locally — is automatically more vulnerable to security attacks.

PayPal

In San Francisco, where even the most unsuspecting family businesses are tech-savvy, PayPal is accepted in a number of downtown cafes and food trucks. Most of them are equipped with an iPad, that displays my face when I check in using PayPal. Darn Good Cafe is one of these places. When it’s my turn at the register, I choose an ahi tuna salad. The cafe employee says, “Sharon?” I nod. He taps a finger on the screen, says “Thanks!” and I’m on my way to satiety.

Despite having to “check in” first, the process was streamlined. It didn’t bother me terribly, but I could see how having your face appear on the POS might weird some people out. It was unnerving to find that as long as my phone was unlocked, the default app setting allowed me to make purchases without a second authentication (like a PIN or fingerprint).

Where PayPal wins

PayPal spent the last 15 years facilitating transactions, and it’s pretty darn good at it. Like all of its online transactions, in-store purchases you make using PayPal are tokenized and encrypted. Plus, if your phone has a fingerprint scanner (like the Samsung Galaxy S5), you can use that to authorize transactions.

A PayPal spokesperson explained that merchants who accept PayPal never see their customer’s complete identity, personal information, or financial data.

For people who use PayPal to make purchases online or send money to friends, using it in stores is a no-brainer. PayPal also allows its customers to make purchases at credit card terminals using their phone number and a PIN code, or the PayPal card.

Great app, poor infrastructure

Because PayPal doesn’t plug into the existing POS ecosystem the way Apple Pay and Google Wallet does, the company seems to have struggled getting merchants to sign on to its app-based solution. PayPal indicates you can shop at “thousands” of stores nationwide. The best way to find out where PayPal is accepted near you is to launch the app and view nearby locations.

For those concerned with privacy, PayPal states it doesn’t look at individual customer transactions, but instead reviews aggregate data to find trends. Merchants who use PayPal can tap into high-level insights about customer purchases.

And, like Google Wallet, you need cell service in order to use PayPal.

Where Apple Pay succeeds, everyone else benefits

Mobile payments aren’t new, and Apple isn’t the first to think of replacing the wallet with the phone. But it will be the first to make paying with our phones something we actually do. And it’s all thanks to perfect timing.

By October 1, 2015, most Americans will carry EMV credit and debit cards. These cards look a lot like the magnetic stripe variety, except they have a chip that can dramatically reduce instances of fraud. To accommodate the new cards, merchants will have to upgrade their credit card terminals. And if they don’t, they could be held financially liable.

The transition will be a major burden for merchants and retailers, but mobile payment companies are rejoicing. The new credit card terminals will all be NFC-ready, inadvertently completing the infrastructure necessary for services like Apple Pay and Google Wallet to operate.

For more iOS 8.1 tips, please see CNET How To’s guide to iOS 8.1.