With the release of Android Pay, the search engine giant has struck the latest blow in the ongoing heavyweight bout that is Google versus Apple. And with the mobile payment marketplace set to be a growing consideration in the remainder of this decade, this is a saga that could last longer than the long awaited Mayweather-Pacquiao fight. And be more watchable…
Android Pay to tap into fertile marketplace
With the announcement of Android Pay, Google has acknowledged that the mobile payment marketplace will be an incredibly fertile one in the coming years. Apple has already anticipated this tendency with the release of Apple Pay, and with Samsung having already announced its own proprietary Samsung mobile payment system, the scene is now set for a three-way joust between the three technology behemoths in the coming years.
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Google would seem to have a significant advantage in this field already, as its existing Google Wallet was certainly more widespread in the United States than Apple Pay. Although there are few recent figures on the market share of Apple Pay, it was reported as being around 1.5 percent just a couple of weeks after the software released. Although this represented a good return for Apple considering its relatively embryonic existence at the time, it is obviously ultimately a small portion of the overall pie.
But Apple Pay should definitely not be underestimated, particularly with the massively popular iPhone brand behind it. Google will also have noted that the recent Apple Watch has been another big success story for Apple, and the wearables niche could certainly be an excellent way for companies to stimulate the mobile payment marketplace.
Android Pay vs Apple Pay
So what will Google offer with this new Android Pay release to make it stand out from its rivals? The first thing to note is that Google has decided to reposition Google wallet in the marketplace. This service will now be rebranded as a peer-to-peer payment system that enables individual users to send money to one another directly from debit accounts. There are numerous examples of this in both the banking sphere and mobile applications, with an obvious example being the app Venmo. Meanwhile, Android Pay will be very much aimed at retailers and credit card payments.
But Google has one big barrier to hurdle before it can establish Android Pay as a success. It is not exactly a revelation that analysts consider the mobile marketplace to have huge potential, and indeed numerous estimates have been made which suggest that it will become a huge market before the end of the decade. One particular guess cites the mobile payment marketplace as being worth $142 billion in the United States by 2019, which would be a threefold increase from its level just last year.
However, consumers are not migrating to this technology as enthusiastically as was expected for one simple reason; credit cards are already convenient. Apple, Google and Samsung have to significantly incentivize consumers to pay with phones as opposed to credit and debit cards. Otherwise there is simply no significant impetus for them to sign up for the service.
Perhaps Apple Pay has already begun the process of changing this perception, and now Android Pay will upgrade this process. Benefiting from Near field communication technology, which is already embedded in the majority of Android phones, this new system will support fingerprint scans in order to unlock phones and authorize payments. This was already included in both the iPhone and Apple Pay service, and has enabled Apple to gain a something of a headstart in the market. This is probably one of the primary reasons why Google is rebranding and relaunching its payment service, with the corporation announcing at the I/O 2015 conference that Android phones with fingerprint readers will be releasing in the coming months.
Making Money from Android Pay
At present it is not entirely clear how Google will make money from the Android Pay service, but it is certain that the corporation will have given this aspect of the system a huge amount of consideration. But it is also important to understand the benefits that the likes of Apple, Google and Samsung can glean from such payment systems.
Above all else, Google will see this payment system as a way to embed itself deeply in the lives of its users. This is a valuable prospect for the corporation, as mobile payments will enable Google to potentially gather more information about user purchases. While this is useful information and data for any corporation, it is of particular value to Google.
Google is hoping that Google Pay data can play a major role in understanding the specific effectiveness of Google advertisements; obviously a major source of income for the company. Effectively, Android Pay will provide a massive supply of Big Data for Google, and an extremely valuable supply at that.
Android Pay privacy concerns
With this in mind, Google will need to move quickly to reassure people about privacy concerns. Apple Pay may have something of an advantage in this department, as studies have indicated that the overwhelming majority of malware, for example, can be found on the Android platform. Apple has an excellent reputation with regard to security, and this may be benefit to the company in the security-conscious mobile payment marketplace.
In an attempt to ease these concerns, Google has utilized a tokenization system which is similar security technology to that used by Apple. This effectively replaces card numbers with one-time random codes, which ensure that if payment details are stolen at any time then the details which are acquired are completely unusable.
Regardless of any security concerns, Android has a massive user base already installed, and has included the Near field communication technology system which will be utilized in Android Pay many years before Apple introduced it to the iPhone range. This could be a boost to functionality, and the massively installed user base will obviously be a commercial benefit to Google in terms of getting Android Pay off the ground.
Google has also learned from its past mistakes, and connected with numerous major companies from day one. Thus, Android Pay will work through the Visa, MasterCard, American Express and Discover payment networks, and J.P. Morgan Chase, Bank of America and Capital One, are planning to take part in Android Pay. It seems that Apple Pay has a major rival.