The biggest question mark surrounding mobile payments in the U.S. isn’t about the latest and greatest mobile wallet to hit the market.
It’s about what it will really take to get users coming back for more.
U.S. consumers have the mobile devices, the “digital wallet” options (a list that’s ever-growing) and merchants with NFC terminals up and running. But consumers continue to default to what they know works and are used to using: plastic cards and cash.
So, when it comes to mobile payments, is creating consumer habituation even possible?
Google sure thinks so.
And what we learned yesterday at its Google I/O conference is its twist on making Android Pay not only a habit in the store but a familiar way to pay across all digital channels.
Android Pay made headlines yesterday (May 18) as Google announced an expanded range of enhancements and capabilities coming to the service. A pretty impressive list of accomplishments that made it clear that the Google payments team has been hard at work living up to its promise made last year that the Android Pay launch was only scratching the surface of its potential.
With Android Pay, Google is redefining habituation as getting consumers used to using the mobile payments option across all of the channels that consumers use to conduct commerce: the mobile Web, in-store, in-app and even at ATMs.
Prior to the announcement, Pali Bhat, Global Head of Payment Products at Google, sat down with Karen Webster to break down all the components of the new face of Android Pay and speak candidly about the pains and the perils of igniting mobile payments adoption anywhere, especially in the U.S.
LAUNCHING ACROSS THE POND
Android Pay is going places, said Bhat — to the U.K., to be exact. One of the biggest (and earliest) announcements from Google yesterday was that Android Pay has finally made it to the U.K. and can now be used everywhere contactless payments are accepted.
As Bhat put it, the U.K. is “light-years ahead” of the U.S. when it comes to the market penetration of contactless payments, making it no surprise that Android Pay had it sights set on launching there.
What is surprising is the plan to not only be available in the big-name retailers and working with top partners but the effort to ensure Android Pay reaches a larger network of merchants, both big and small.
Hands down, the most exciting part of the U.K. launch, Bhat said, is the partnership with Transport for London, which he said is designed to create a “truly magical experience that's better than using [the consumer’s] card or a ticket.”
With nearly 13 million journeys taken every day via Transport for London, the opportunity to change the way Londoners interact with transportation via commerce was huge.
Bhat said that part of the partnership involves not requiring an Android Pay user to present their authentication again for low-value transactions. Yep, you heard that right. It means Android Pay users can simply stroll through a station turnstyle without breaking their stride, knowing that the payment is already taken care of.
“The beautiful thing is that we've done it in a secure way. If we detect too many transactions in a short period of time or see that there are higher-value transactions, we'll automatically compensate you using our machine-learning technology that we've used for our risk engine,” Bhat explained.
Transport for London transactions will also produce richer, more informative receipts for Android Pay users, showing which train or bus stop they entered and exited based on the payments that took place.
The capability will also address what Bhat described as one of the biggest pain points for Londoners today, which is that riders are often penalized for not tapping out upon exiting a train station or bus. Right now, there is no way for the Transport for London team to actually inform users that they forgot to tap out. In most cases, Bhat said these are well-meaning riders with no intention of doing anything fraudulent but then are still forced to pay the fees and a fine for forgetting to tap out.
“That's cumbersome and costly for users. If we detect that you tapped in but, after a certain amount of time, forgot to tap out with Android Pay, then we'll automatically notify you,” he added.
HELLO ATMs, GOODBYE PLASTIC
Back in the U.S., Android Pay is looking to change the way users interact with their ATMs by taking plastic debit cards out of the equation.
As part of an effort to have more users find value in using Android Pay in their everyday purchases and finances, the mobile wallet will now enable users to get cash out of an ATM without having to actually put in a debit card.
Instead, users can simply use their mobile device with Android Pay, tap at the ATM and proceed with the process as usual. No more carrying around a plastic debit card to go to the ATM.
Bhat said the initial partnership with the service will be with Bank of America, but the intention is that other banks will soon follow suit. Bank of America customers who use Android Pay can expect to see the service rolled out at hundreds of locations across the U.S. over the next couple of months.
ANDROID PAY’S IN-APP MAKEOVER
Google is trying to make it very clear that there is way more to mobile payments than the contactless transactions that take place at payment terminals in-store.
Bhat said that it’s about all of the different use cases for mobile payments, with the in-app payment experience being a huge part of that.
While Android Pay will continue to integrate into popular apps, such as Uber and Airbnb, Bhat said it’s not just about having the top apps. “We want it to be easy for even the smallest apps to be able to add Android Pay."
Now, all that stands between an app integrating Android Pay is less than 10 lines of code.
Google has also partnered with a slew of payments processors, from Braintree and Stripe to First Data and Vantiv, all focused on working to make it simple to bring Android Pay to apps, both big and small.
Android Pay’s APIs are also expanding and opening up to the wider developer community, ensuring that the access and availability of those APIs are improved.
When it comes to apps, Bhat pointed out that research shows, although the average user may download more than 100 apps on their phone, they only use roughly 17 of them — even though the number of places users actually want to access on their mobile devices is far higher.
As Webster remarked, users don't want to junk up their phones with a bunch of apps they are only going to use once. To overcome this challenge and still increase merchant app exposure virally, the Google Play and Android teams worked together on Android Instant Apps.
The “mind-blowing technology,” Bhat says, will allow consumers to pay with Android Pay with a single tap, without the cumbersome process of having to download and install an app that may be used only occasionally.
Rather than installing a merchant’s app in order to purchase a product, a user can be sent a link that allows the app to instead be streamed on their phone and enable the transaction to take place without having to search for and/or download the app.
“It provides the full native experience on the phone without ever having to install the app, and then, when the payment is done, it goes away,” Bhat said. “We've worked to build payments into the experience. The exact same Android Pay experience that you get when you have an app that you've installed on your phone, we'll bring that to Instant Apps as well.”
THE MOBILE WEB MOVEMENT
There’s no question that payments on mobile Web need some work — smaller screens and online checkout forms just don’t mix. It’s been challenging for users to actually check out using mobile Web, and the data doesn’t lie when it comes to how low conversion rates are on mobile Web today.
Android Pay is introducing a new cross-browser standard aimed at bypassing the online checkout form on mobile Web altogether.
The PaymentRequest API will enable users to simply tap a button, and the browser will then match the intended payment method with that of the merchant and process the checkout seamlessly, Bhat said.
VALUE ACROSS THE ECOSYSTEM
Users aren't the only ones set to feel the value-added love from Android Pay. Google is also looking to bring more value to merchants and its other partners across the financial services landscape.
APIs for merchants will be opened to not only support saving services, such as loyalty cards and offers to Android Pay, but also to show merchant partners how to get more consumers to sign up for their services.
Bhat used Google’s partnership with Walgreens as an example of this capability in action. For consumers opted in to the Balance Rewards Card program, Walgreens allows the loyalty card to be added to Android Pay in-app but also via email, SMS and all of the ways in which they engage with customers, he explained.
But if a Walgreens shopper isn’t enrolled in the rewards program but pays using Android Pay, the retailer has the ability to send a personalized message asking them to join and enabling them to sign up with a single touch.
“We will complete all the information so the only thing a user has to add is a password for the account, and they are done and the loyalty card can be saved to Android Pay as well,” Bhat said.
Another Android Pay API, which it plans to open up and make available to all issuer partners, will enable a bank’s mobile app users to set up and manage Android Pay right in-app, showing a consistent theme of not forcing users to install any unnecessary apps on their mobile devices.
BUILDING MOBILE PAYMENTS TO LAST
As the Android Pay ecosystem continues to evolve, Bhat said Google will continue to bring more value through its APIs and partnerships, with other payments players to deliver solutions that drive lasting mobile payments adoption.
"We think when you combine the in-store payment experience with the in-app experience, across both installed apps and Instant Apps, and finally you add in the mobile Web experience, there’s a complete solution for mobile payments," he explained.
Android Pay is looking to bring all of those pieces together in order to make a compelling and meaningful value proposition to consumers. One that will ensure they don’t just use the mobile wallet as a method of payment but that it becomes an engrained piece of their daily lives.
"By building out all of the different use cases, it's really much more of a situation where users can start getting accustomed to using mobile payments,” Bhat said. “We truly believe that the full story makes a huge difference, as opposed to just solving just one piece of this.”