Android Pay: Mobile Payment Systems, Unite

Google is taking yet another approach to getting mobile payments off the ground with Android Pay, which will give developers an API for building mobile payment capabilities into an unlimited variety of apps. Google aims to unify mobile payments with Android Pay, SVP Sundar Pichai said at MWC in Barcelona. NFC, MST, EMV and other technologies all might be compatible with the Android Pay framework.

Google this week confirmed that it's preparing to launch a mobile payments framework called "Android Pay." Google SVP of Product Sundar Pichai discussed the project at Mobile World Congress in Barcelona, Spain.

Android Pay will be an API layer of Android.
Google will incorporate standard features for mobile payments, such as tokenized card numbers, into an Android Pay software development kit. Developers and device manufacturers will be able to use the framework to build payments into their own apps.
Google Wallet, which has been limping along for the past three years with 4 percent of the mobile payments market, will leverage Android Pay.

How Android Pay Might Work

It's a given that Android Pay will have to work with near-field communication, or NFC, but Pichai's remark that the framework will have NFC components suggested the door may be open to other technologies.
Possibilities include the magnetic secure transmission, or MST, technology developed by LoopPay, now owned by Samsung and folded into Samsung Pay, announced earlier at MWC.
LoopPay's technology "allows a phone to send a magnetic signal to preexisting credit card readers in order to execute a payment, which is wholly different from NFC," Andrew Stern, editor of digital media at Copper Mobile, told LinuxInsider in a previous conversation on this topic.
Samsung Pay is Samsung's new effort to build its own ecosystem.
While Apple Pay will prove a market and educate partners in 2015, it will leave room for some other company to become the dominant payments provider for the Android device market, suggested Ian Fogg, head of mobile analysis at IHS.
Samsung Pay has support from MasterCard and Visa, thereby itself supporting tokenized cards. Unlike its rivals, it aspires to provide wide compatibility through enabling barcode, MST and NFC support.
Google intends to work with Samsung to align Android Pay with Samsung Pay, Pichai said.
That might be crucial for Google, because Samsung dominates the Android market.
Android Pay also might work with EMV cards, which eventually might replace the magnetic cards currently used in the United States, because they're more secure.
Nearly 600 million EMV cards will be in circulation in the U.S. by the end of 2015, the Payments Security Task Force has predicted.

Pitfalls Google Faces

Google aims to unify mobile payments with Android Pay, according to Pichai, but that may be putting too brave a face on things.
Android is badly fragmented, and no one payment app will work across all versions of the OS, partly because older versions don't have the capability to accept such apps, and partly because carriers notoriously are slow to roll out OS and app updates to Android devices.
Teaming up with Samsung might help Google strengthen Android Pay's chances of success.
Whether Samsung might be willing to go along is open to question, though. Google has struck agreements with Verizon Wireless, AT&T Mobility and T-Mobile to preinstall the Google Wallet app, including its tap-and-pay functionality, on Android devices they launch in the U.S. later this year. It's possible that Samsung might see this as a threat and refuse to go along with Android Pay.
On the other hand, Samsung doesn't hold a winning hand by any means.
If Samsung limits Samsung Pay to its own smartphones, it will fail to scoop up all the opportunities left untouched by Apple, IHS' Fogg told LinuxInsider.
Further, Samsung will launch this summer only in the United States and Korea, leaving "operators, payment providers and other ecosystem players a window to establish a mobile payments lead in the overall Android smartphone market," he pointed out.

Searching for That Pot o'Gold

The mobile payments arena remains fragmented and wide open, according to Morgan Stanley.
In the financial services arena alone, mobile payments can push global revenues from US$175 billion to $250 billion, the firm predicted.
"Right now, we have American Express, MasterCard, Discover, Google, Samsung, ApplePay," technology analyst Jeff Kagan told LinuxInsider in an earlier conversation on this topic. "There's room for multiple contenders, and they all stand a great chance to be successful."
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