3 MIN READ
5 MIN READ
3 MIN READ
At the Mobile Payments Conference in Chicago last month, Jack Connors, Google's head of commerce partnerships, told attendees that Android Pay would launch "very soon." A week later, Google announced a soft rollout of its revamped mobile wallet.
Android Pay is 100 percent focused on the merchant relationship with their customer, Connors said at the conference. By positioning the merchant as the owner of the relationship, Android Pay will leapfrog the current offering from Apple and move the mobile payments industry to the next generation and closer to ubiquity among most consumers.
In order to understand Android Pay, we have to start with ISIS. Yes, the notorious terrorist group inadvertently has a hand in shaping the mobile payments landscape in the U.S.
Prior to ISIS being a terrorist organization, Isis was also the name of a joint venture between AT&T, T-Mobile and Verizon created in 2010 that was intended to be a mobile payments platform, but evolved into a mobile wallet offering. Isis was forced to change its name, for obvious reasons, to Softcard and the brand never fully recovered. Google acquired Softcard and its IP in February 2013 and wasn't heard from much again until the Mobile Payments Conference where Connors described how Softcard's Smart Tap technology is at the center of Android Pay's value proposition for consumers and retailers.
Smart Tap uses NFC to transfer not only payment information but also loyalty, rewards, coupons, discounts and offers wrapped in a secure tokenized transaction. The rewards programs, discounts, offers, points, etc. create a relationship between the consumer and the retailer, and these 'relationships sit inside "Google Wallet" and the Android Pay app facilitates the transaction as the retailers deepen their relationship with their customers.
And this makes a lot of sense. Retailers have the advantage over handset makers, mobile wallet providers and tech companies when it comes to building relationships with consumers. They know their customers, interact with their customers, they have the products their customers want, they own the stores the customers are shopping in, they have the money coming in from their customers and they have the ability to set the prices. The retailers should own the relationship not the wallet providers, handset makers or tech companies.
But isn't this what Google has been doing all along? Fostering relationships between retailers and consumers through its search engine and, in turn, creating value for consumers and retailers by connecting them through its various advertising and search platforms. Google is now using a similar "retail-centric" strategy with Andriod Pay at the point of sale.
In a video of Android Pay in action, a consumer walks up to a Coke vending machine, ukulele music playing in the background, and hold their phone up to the NFC reader to purchase a Coke. Because the consumer has signed up and included their Coke rewards in their Andriod Pay app, the consumer's Coke Rewards details are displayed on their phone's screen. Once the transaction is completed through Smart Tap, Coke rewards are earned. If the consumer makes three more purchases, they receive a free Coke.
The consumer didn't have to enter a password or remember or remember their rewards number to complete the purchase. It was an easy, secure transaction and rewards were earned by the consumer and the Coke brand has a more loyal customer.
Connors said his expected timeline for mobile payments ubiquity is 18-to-24 months. Why is he so bullish on the future success of mobile payments given where we are today?
The value proposition of seamless and secure mobile rewards, coupons, offers and discounts at the point of sale, the enormous marketing machine that is Google, and the shift to EMV cards and the market share of Android-enabled phones will combine to position Android Pay as a dominant player in mobile payments. Two thousand sixteen will not only be an interesting year for politics, but it will also be an incredible year for mobile payments.
See the original at MobilePaymentsToday.
Tim Spenny is Vice President on the Financial Services team at GfK. He can be reached at firstname.lastname@example.org.
5 MIN READ
Subscribe to GfK Insights