Will Android Pay Make Banks Line Up for Google Wallet? (May 26, 2015)
Strong signs suggest Google Inc. this week will announce Android Pay, its new mobile payments API for developers, likely revitalizing prospects for Google Wallet, and kicking off a summer of fresh m-payments competition, which could put the heat on Apple Pay and other emerging approaches. Though specifics about Android Pay are unknown, one of the most intriguing things about Android Pay could be the fresh appeal it provides for banks to support Google Wallet, Rick Oglesby, research director for Double Diamond Group, speculates.
Observers expect Google to introduce a fingerprint method of validating Android Pay users—similar to Apple Pay’s Touch ID approach. In addition to the user experience, with Android Pay Google likely will replicate many of the security features of Apple Pay, Oglesby tells Paybefore, which will be a lure for getting banks’ support. Because the payment networks deliver much of the tokenization capability Apple Pay leverages—which has proved to be robust—that would be an obvious path for Google to pursue with Android Pay, he believes.
At its I/O 2015 developer’s conference in San Francisco beginning on May 28, Google is expected to introduce Android M, its latest operating system, with native fingerprint authentication enabling users to log into supported apps and services using their fingerprint ID, instead of a password. That feature will provide a more convenient approach for app developers and handset manufacturers integrating Android Pay, and is expected to support in-store and in-app payments via host card emulation (HCE) for NFC-enabled Android handsets. Android Pay also will become the platform supporting Google Wallet, which remains the company’s mobile wallet app, Google has said.
If Android Pay in fact offers an approach parallel with Apple Pay in terms of security, and banks come aboard, they might find further advantages to participation. “I expect Google will be much more willing to make pricing concessions than Apple [with Apple Pay], since it has other ways it could monetize payments, such as through its commerce offerings,” Oglesby suggests.
Google Wallet, initially introduced in 2011, until now has struggled to gain mass adoption because of the lack of a broad array of handsets supporting NFC. Until recently, major carriers didn’t support Google Wallet, but that changed with Google’s acquisition of Softcard earlier this year, when major carriers including AT&T, T-Mobile USA and Verizon agreed to support Google Wallet. “The Android platform continues to grow … Buoyed by the Softcard purchase, I expect Google to have much stronger bank participation than it had in previous generations of Google Wallet,” Oglesby says.
Adding to the intensifying heat around m-payments, Korean handset maker Samsung has pledged to introduce Samsung Pay as early as this summer. Beginning in the U.S., Korea and the U.K., Samsung Pay will enable consumers to use its handsets to pay at any merchant location, whether or not they support NFC, via its patented “Magnetic Secure Transmission” technology. That could give Samsung an opportunity to open m-payments to a broader universe of handset owners, including older, non-NFC models.
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