Android Pay gains pre-launch mojo

Google Inc. shared the look of its forthcoming Android Pay app at Google I/O 2015, a conference for developers held May 28 to 29 in San Francisco. In his opening comments, Sundar Pichai, Google's Senior Vice President of Products, used a picture of cute babies to illustrate the sheer critical mass of Android adoption. “Last year, four times as many Android devices were sold per day as there were babies born,” he said. He estimated more than 8 million Android devices are activated every day.

Pichai stated that Android Pay was purpose-built using Google’s three core principles: simplicity, security and choice. Google Vice President of Product Management Ariel Bardin expanded on these themes. Bardin said simplicity enables loyalty, gift cards and coupons to coexist in a single tap, and a payment transaction to be made simply by unlocking the phone and placing it near the POS; security is achieved through strategic partnerships with payment networks to adopt tokenization “so we don’t have to store information on the phone.”

Choice refers to a culture of openness and innovation that led to Google’s development of a new application programming interface (API) layer that gives third-party app developers access to “the same resources that we use to power tap-and-pay,” Bardin said, adding that this enablement and open source development environment means consumers can use the Android Pay native app or any approved partner apps to tap and pay with Android devices.

A well-timed debut

Pichai noted the following contributing factors that are helping Android Pay and mobile commerce take hold:

• Seven out of 10 Android devices used today are near field communication (NFC) capable.
• Every new Android device that ships is capable of NFC payments.
• Consumers know that their new Android devices are equipped for mobile payments.
• Approximately 700,000 merchants can accept tap-and-pay payments.
• The merchant ecosystem is in the midst of an upgrade cycle that will provide better security and will be able to accept NFC payments.
• An upsurge in merchant terminals that can accept NFC payments makes the environment ripe for mobile payments innovation.
• Android Pay is located deep within the Android ecosystem, serving as glue between consumers and merchants.

Set to transform mobile payments, banking

Brian Day, Director of Digital Strategy at The Members Group, a Des Moines, Iowa-based consultancy, anticipates the Android Pay rollout will lead to wider adoption of mobile banking. “With Google’s confirmation of Android Pay as an open API, the market became even more exciting,” he said. “An open API, unlike a proprietary API, paves the way for more developers to build payments functionality into their own apps, including mobile banking apps. TMG has long contended the market winners in digital banking will be those that combine banking and payments functionality.”

Deborah Baxley, Principal at Capgemini, a multinational management consulting corporation headquartered in Paris, is also optimistic about Android Pay's prospects. “I believe that adoption of Android Pay will be brisk since there will be so many devices that can use it and since the number of contactless and near field communication POS readers are growing so rapidly,” she said. “The user experience for Android Pay appears to be nearly as seamless as with Apple Pay.” She also noted that Google’s Soft Card acquisition gives Android Pay marketing and loyalty features not yet available in Apple Pay.

Visa Inc. is also on board. "With so many people using Android devices and a passionate developer community, we couldn’t be more excited to have Google as a partner in our program launch,” said Jim McCarthy, Executive Vice President of Innovation and Strategic Partnerships at Visa.

A multipronged launch

Bardin noted that strategic partnerships are driving the hotly anticipated launch of Android Pay. Here are some examples:

• Mobile network carriers: Android Pay will be preloaded on “tens of millions of phones” deployed by AT&T, T-Mobile and Verizon Wireless, and salespeople will help users set up Android Pay in the stores, according to Bardin.

• Payment card networks: Visa, MasterCard Worldwide, American Express Co., and Discover Financial Services “helped us with tokenization, replacing payment card numbers with virtual account numbers,” Bardin said.

• Banks: “Leading financial institutions have made it possible for consumers to securely use existing credit cards with Android Pay,” Bardin noted

• Merchants: Bardin showed two slides filled with leading retail and hospitality brands, noting that more than 700,000 merchants are ready to support Android Pay

• Device manufacturers: Bardin stated that a number of leading POS manufacturers already deploy NFC-enabled payment card terminals and have incorporated Android Pay into their devices. An Android Pay demo during the keynote presentation at Google I/O featured a mobile device paired with a terminal by Ingenico Group.

• Self-attended market: USA Technologies Inc. revealed on May 28 that it released a new generation of Android Pay-enabled kiosks for consumers that facilitate both in-store and in-app payments. "We believe that Android Pay is the perfect match for self-serve retail,” said Stephen P. Herbert, Chairman and Chief Executive Officer of USA Technologies, adding that the industry anticipates increasing numbers of vending, kiosk, commercial laundry and unattended retail operators to move to cashless systems.

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