Android Pay & Alignment in Mobile Payments

Posted: Jun 01, 2015

If the masses of consumers don’t move to mobile payments, it won’t because they can’t.

The number of mobile phones that can be used for payments are increasing exponentially along with the terminals in stores that can accept those payments.

Yesterday’s introduction of Android Pay, Google’s latest mobile payment approach, puts down one of the last needed major pieces of the mobile payment puzzle.

As an aside, one of the niftier features of Android Pay is its linkage with loyalty cards.

The example Google gave is when a person taps to buy a Coke at a vending machine, the MyCokeRewards are automatically applied, since the payment terminal receives the loyalty program offers along with the payment info.

This is essentially the same approach mobile payment enabling company Paydiant takes. That company was recently acquired by PayPal and is the payment engine behind the Merchant Customer Exchange (MCX), the mega-merchant venture rumored to be launching sometime this year.

Google is not new in mobile payments, of course. I rather liked its early Google Wallet, which came out many mobile payment services ago, until the phone carriers essentially shut it off.

Now that Google picked up whatever tech assets were in the failed mobile payment joint venture of AT&T, Verizon and T-Mobile known as Isis and then Softcard, it comes bundled with Android phones.

Android phones have had NFC built in years before Apple adopted it in its iPhone 6 for Apple Pay, but there weren’t many broadly accepted payment services using it.

Apple has been driving NFC mobile payment adoption since its Apple Pay launch, with merchant after merchant jumping on the bandwagon.

And thanks to the two major suppliers of mobile payment terminals, Verifone and Ingenico Group, that bandwagon is growing rapidly.

I spoke with executives from both companies yesterday, and they clearly will not be the ones holding up NFC payments.

”Shipments of NFC terminals are increasing quarter to quarter,” said Vin D’Agostino, Executive Vice President of Commerce Enablement at Verifone. “Twenty-five percent of the U.S. market is NFC capable.”

In hardly a coincidence, terminals from Ingenico Group, the other major maker of payment terminals in use around the world, just happened to be already set to accept payments via Android Pay.

“Google started working with us on this a couple of months ago,” said Greg Burch, Vice President Mobility, Business Development at Ingenico Group. “All of our devices already support NFC.”

As is the case with Verifone, that means the terminals support both Android Pay and Apple Pay.

The interesting catch here is payment terminals being capable vs. enabled.

While Ingenico and Verifone make their terminals capable of receiving NFC mobile payments, it’s up to the merchant to make them enabled to. Without going into the actual sausage making here, that essentially means the merchants linking them into various other aspects of their internal systems.

And now that the two leading operating systems of Android and iOS come with NFC inside, more consumers will at least have the power to pay in their hands, where NFC payments can be accepted.

“Merchants see where the puck is heading,” said D’Agostino.

As was the case after the Apple Pay introduction, various entities already are talking about acceptance of Android Pay. For example, USAA Bank in San Antonio yesterday announced it would allow customers to use MasterCard and Visa through Android Pay.

Even if the majority of payment terminals are NFC capable and NFC-enabled phones proliferate, the actual behavior of the consumer will determine success.

“It comes down to the consumers,” said Burch. “They will drive it.”

It is being built. The question is if they will come.