Mobile Commerce

What Makes Android Pay Tick?

Between the mainstream press and the countless blogs, pulling off any sort of surprise — like, say, an early drop of a major product — is nearly impossible. But Google, with its freshly minted Android Pay, actually managed to do it twice in the space of a week.

The first early drop was yesterday’s official announcement that Google’s mobile payment system will be available to Android device owners whose phones run operating systems KitKat and forward. Google’s Director of Product Management Pali Bhat told MPD CEO Karen Webster that with such extensive backwards compatibility (KitKat was released in 2013) seven in every 10 Android-device owners in the U.S. will soon be able to pay the Android Pay way.

"It is a huge number of devices,” Bhat told Webster in an extensive debrief prior to the launch of Android Pay. “We wanted it to work on as many devices as possible. The best experience is going to come via Android M as you would expect, but openness is a core value of what Android Pay is about."

Something that appears to be more than just a Google/Android Pay talking point.

Bhat and team were remarkably undisturbed by the fact that yesterday’s official launch was upstaged about a week ago by the intrepid (and impatient) in its user base. They cleverly figured out that, though the app wasn’t yet visible in the Google Play store, the infrastructure was available through the latest update and therefore accessible with some minor tinkering.

So – voila – Android Pay launched for those very early adopters last week.

"[It was available yesterday] unless you are a developer and hacked into the solution,” Bhat joked with Webster. “We are quite glad they were able to do it, it shows interest and excitement in the marketplace."

More importantly and perhaps more subtly, Bhat’s reaction also underscores a core principle that he and the Android Pay team say sets them apart from the other “Pay” players in the ever-expanding mobile payments ecosystem.


After listening to Bhat describe the vision, and even hint a little at the roadmap for its future, Android Pay is intended to be something much bigger than “just payments,” and to some extent, something that even the team can’t yet fully imagine or even articulate. A key tenet of Android Pay is, in fact, a hallmark of Google itself – an expertise in creating and nurturing ecosystems that inspire and drive innovation throughout them.

And that’s how Bhat and the team describe Android Pay – the foundation for creating a host of commerce experiences through which payments can be embedded, limited in scope only to the imaginations of those in the ecosystem who wish to play along.

Thinking of Android Pay as a payments application first would have, they say, driven them down the same path that they feel impeded their ability to be successful in their prior attempts at mobile payments. Of course payments is what Android Pay enables, but isn’t what drove its design, its operating principles or even how it plans to make money. In fact, Android Pay isn’t about making money yet. That part is still TBD. But when they do decide, they say one thing is totally off the table – monetizing transaction data.

[bctt tweet=”It may be called Android Pay, but it’s not really about payments”]


Bhat and his team believe emphatically that the winning move in mobile payments cannot be done from a walled garden ecosystem that keeps a tight control on all the relationships within it. That’s no big surprise coming from a company whose position has always been to let a thousand developer flowers bloom – sometimes to its great detriment given the historically fragmented nature of how the Android ecosystem has evolved.

But things appear to be a bit different with Android Pay.

Android Pay does have a set of APIs that are open to everyone. But, these APIs include the same rules and operating principles for everyone — including Google. So, all developers have full access to those APIs, and can develop on top of them to their heart’s content. But they can’t change them.

A design and business model decision that seems pretty essential if Google is serious about scaling Android Pay with not only the same user experience everywhere, but with the same rules of the road throughout the ecosystem. Bhat says that Android Pay took great pains to “create and even the playing field” so that no one had to build “bespoke connections” to networks and banks, a nod to the realization that scale means having a standard that everyone can use as their development baseline.

A feature also valued by one of Android Pay’s launch partners, Visa, who views its role as a key enabler to the Android Pay ecosystem. Jim McCarthy, executive VP of innovation and strategic partnerships at Visa, told Webster shortly before the Android Pay news broke that, “Through Android Pay, Google has the ability to instantly work with the more than 14,000 financial institutions across the world that also work with Visa. Going forward, Visa will offer more Web services through its open platform to enable new payment experiences such as Android Pay as they proliferate across the world."

[pullquote] We want to enable payments as an integral part of the consumer’s phone and not just as an app. [/pullquote]


The Android Pay team also described the road to its launch as one that would “reset” how consumers think about payments on the mobile device. Calling previous attempts at mobile payments (their’s and others’) in terms of “clunky add-ons,” Android Pay will come pre-installed on all new Android phones from Verizon, AT&T and T-Mobile – an embedded function in a consumer’s Android phone.

"We want to enable payments as an integral part of the consumer’s phone and not just as an app,” Bhat told Webster. “I think what we are going to see over time is going to be that Android Pay will evolve from just being an app to pay with credit or debit credentials to a variety of use cases, particularly in app."

That, the Android Pay team believes, will deliver a mobile payments solution grounded in choice. Android Pay will be available on a broad number of consumer handsets at a variety of different price points. And that means that Android Pay can get its app into lots and lots of hands, literally giving way, it believes, to the creation of a diverse consumer base all over the world that can use Android Pay to pay.

Provided today, of course, that it’s via NFC or HCE. Today, Android Pay can be used at all of the in-store locations that accept Apple Pay.

[bctt tweet=”Android Pay is intended to be something much bigger than ‘just payments.'”]


The Android Pay team strongly believes that it has seeded the mobile payments ecosystem with a collection of assets that will spawn a variety of uses cases limited only by the imaginations of those who want to access their platform, including the ability for banks to access the Android Pay API and actually build payment capabilities directly into their mobile banking apps.

In what must sound like manna from heaven for banks frantic over the thought of being invisible in the burgeoning mobile payments ecosystem, Bhat told Webster that in such a use case, “[the consumer] doesn’t have any need to use the Android Pay app Google is delivering, they can use the bank app to hold their card, manage the card and complete the payment."

And securely.

Android Pay utilizes tokenization to secure cardholder data and transactions.

"This means that Android Pay won’t send your actual credit or debit card number with your payment. Instead, we’ll use a virtual account number to represent your account information,” Google noted on its blog the morning of the launch.


[pullquote]The Android Pay team describes a world that “in five years’ time” has more people using their phones to pay than cards. [/pullquote]

The journey ahead won’t be one that’s fast nor easy.

Android Pay has observed the struggle that Apple Pay has encountered in getting a mobile, tech savvy, affluent early adopter crowd jazzed up about mobile payments – and their adoption challenges have been well documented on these pages. Those challenges are made more complicated by Apple Pay’s choice of NFC technology and corresponding lack of merchant acceptance – a situation that Android Pay also faces and must address in order to reach its goals.

As we know, and they readily admit, the road to ignition will be bumpy. And a journey that consumers will make possible only if they see the real value in ditching cards for phones, even if they’re carrying around phones that have payments capabilities ready for them to use. Reflecting on the future of Android Pay, it’s clear that the team understands the slog to scale that mobile payments is – and what’s needed to, in our words, ignite it.

The Android Pay team describes a world that “in five years’ time” has more people using their phones to pay than cards, much like people today have ditched cameras because they are now embedded in their phones. And a world that in that same span of time will require a real re-think of the merchant consumer experience in the store — and the design of a commerce experience that doesn’t involve one device in the hand of the consumer whacking a terminal on a store counter to checkout.

But Bhat and team believe they have the fundamental pieces in place.

  • By making Android Pay open, but with rules, they hope to attract lots of innovators who will create cool things that consumers want to use.
  • By leveraging the loyalty capabilities via the Softcard acquisition that combines rewards, private label cards, gift cards and a host of other loyalty capabilities, they hope to make it convenient for the consumer to use.
  • By launching with the support of all of the major card networks — American Express, Visa, MasterCard and Discover — as well as many of the top issuers — Bank of America, Capital One, Navy Federal Credit Union, PNC, Regions Bank, USAA and U.S. Bank (Wells Fargo and Citi are said to add their support within the next few days) — they hope to give consumers the ability to use the cards that they have in their wallets in their phones.
  • By revamping Google Wallet as a free debit-card initiated P2P money transfer platform with lots of bells and whistles layered on top of it.
  • By riding the wave of digitization and mobilization of commerce that this time they hope will work for and not against them.

“We’ve created a worthwhile ecosystem with a lot of opportunities,” Bhat remarked. “If users adopt it, then there’s awesome opportunities for everybody.”

Now the challenge is to see if they will come.


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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