Google will collect no fees from Android Pay transactions

Google will collect no fees from Android Pay transactions
While Android Pay and Apple Pay may be near-identical reflections of each other in terms of primary function, one big differentiator that may give Google’s new mobile payment solution an edge is, of course, related to money.

When Apple introduced Apple Pay last year, there was an understandable arrival of banks to be part of the picture, after all, Apple may not always be the first on the scene with a feature, but it generally executes well much of the time (Apple Maps notwithstanding).

That gave Apple a bit of leverage over the financial institutions, and they were all too eager to let Apple take a piece of the razor thin slice of fees collected every time we buy something with a credit or debit card.

For credit card transactions, Apple gets 0.15% of the value of the transaction, and for debit card based purchases, it is a full 0.5%. Those numbers do not look very big, but in terms of card-based transaction fees, they are big money. If we take even a modest estimate of potential Apple Pay users, the revenue figures are surely nothing to sneeze at. Expect some type of Apple Pay statistic announcement during WWDC this coming week.

Android Pay, however, will collect no such share of the transaction fees. That is thanks, in part, to Visa and MasterCard opening up their standardized tokenization security features, making them free. Tokenization is a method that swaps card and transaction data with unique sets of numbers that validate the purchase.

The merchants never get the card data, and no directly sensitive information is transmitted, ostensibly eliminating, or severely curtailing, the risk of online theft.

Since Visa and MasterCard rule the credit and debit card transaction landscape, some think this will force Apple to negotiate terms again if Apple Pay is to remain a visible payment option after current agreements are up for renewal in a couple years.

The no-fee arrangement with Google was not necessarily by choice, no business likes to leave money on the table, but the new tokenization rules left Android Pay with no leverage to negotiate any kind of fees. However, this may prove to work to Google’s advantage when it pushes for wider acceptance of Android Pay as it expands to other markets.

source: The Wall Street Journal

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72 Comments

1. kozza3

Posts: 778; Member since: Oct 17, 2012

crazy to think

25. neela_akaash

Posts: 1239; Member since: Aug 05, 2014

That's the beauty of Google. They are always focused on consumer's experience rather than just making profit...

28. Liveitup

Posts: 1798; Member since: Jan 07, 2014

You must be on crack to think that Google is not concerned about making a profit.

38. tedkord

Posts: 17307; Member since: Jun 17, 2009

Yeah, that's a pretty silly thing to think. Of course they're all about profits. All companies are.

42. neela_akaash

Posts: 1239; Member since: Aug 05, 2014

Yes ofcourse they make profit. I said they are not greedy towards profit.

52. xondk

Posts: 1904; Member since: Mar 25, 2014

Well there's profits And we can't really get away with this so lets not do it. And taking money from banks with transaction fee's and such is one of the "can't get away with" things, Apple might have loyal followers that will buy their products good or bad, but the banks will at the very least resist, at least in europe. There is very little reason for them to hand over those money to apple.

70. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

You can't read, nor do you have good comprehension skills either.

43. KidAndroid

Posts: 39; Member since: Nov 04, 2014

They make profits just not off of the same things Apple makes their money off of. Google makes money off of our data and habits, no not selling your info they don't do that they use our data and habits to basically sell advertising and know where to pinpoint the users that will fit a certain advertisers ad for their products. They makes awesome software that we want to use and from that use they get the data they need to sell advertising space to companies. It's a win win for Google and users who get awesome free software, and sorry iSheep you have to pay for your subpar software after already paying too much for your outdated hardware it sucks to be you

73. ILikeBubbles

Posts: 525; Member since: Jan 17, 2011

agreed. it does seem like they put at the VERY least, equal stock in consumer exp and profit.. obviously all companies want profit. but their concern with user experience varies.. google has continuously seemed like one of the good guys. not flawless... but better than most.

31. waddup121 unregistered

Great

2. Ninetysix

Posts: 2962; Member since: Oct 08, 2012

Nice name.

5. tedkord

Posts: 17307; Member since: Jun 17, 2009

Terrible, using a common word like Pay to name a service one uses to pay things.

13. illusionmist

Posts: 157; Member since: Jan 29, 2013

Keep telling yourself that and imagine how the clowns on this site would react if Apple Pay was the one that comes out after the other.

14. tedkord

Posts: 17307; Member since: Jun 17, 2009

It did. Years after Google Wallet. But I see what you mean, after the riots when Apple used the word Maps in the name of its navigation app. It was all anyone talked about for months. Oh, wait. Nobody did.

16. bucky

Posts: 3776; Member since: Sep 30, 2009

You know what he is talking about. Don't twist or skew his point.

32. tedkord

Posts: 17307; Member since: Jun 17, 2009

I know exactly what he's talking about, and I debunked every bit of it, exposing the hypocrisy.

34. Awalker

Posts: 1973; Member since: Aug 15, 2013

There's a reason why they chose the name Android Pay - they're going to let Apple do all the advertising for them. When consumers see Android Pay preinstalled on their phone they're going to know exactly what it is. If they kept the name Google Wallet they would need to do advertising.

35. tedkord

Posts: 17307; Member since: Jun 17, 2009

Then I'll assume that's the same reason Apple chose to call their navigation app Apple Maps, they wanted to let Google Maps do all the advertising.

40. Awalker

Posts: 1973; Member since: Aug 15, 2013

No. Google nor Apple need to do any advertising for that. Everyone knows maps equals navigation.

46. junek

Posts: 4; Member since: Apr 25, 2014

Lol. Same logic for PAY ...

55. Awalker

Posts: 1973; Member since: Aug 15, 2013

If they kept the same name (Google Wallet) then they would have the same problem they have now - very few people know what that is. With a name like Android Pay consumers will associate it with Apple Pay and know exactly what it is. This is very important because Android Pay will be preinstalled on all Android phones from Verizon, AT&T and T-Mobile.

49. tedkord

Posts: 17307; Member since: Jun 17, 2009

But no one would be able to figure out the word Pay. Interesting. Of course, I realize that the actual logic is Apple good, Android bad.

57. Awalker

Posts: 1973; Member since: Aug 15, 2013

No. No one would be able to figure out Wallet. I don't know how you got Apple good, Android bad from my post. I'm an Android fan and I don't own any products from Apple. I just think this is a good strategy from Google. Let Apple do all the advertising while Android Pay rides the wave.

64. tedkord

Posts: 17307; Member since: Jun 17, 2009

Seriously? Wallet?

65. Awalker

Posts: 1973; Member since: Aug 15, 2013

Why do you think very few people know what Google Wallet is? Also, why do you think Google went with Android Pay instead of continuing with Google Wallet? I'm curious about your answers to these questions.

66. Ninetysix

Posts: 2962; Member since: Oct 08, 2012

Bunch of feminists working @Google. It's either Android Pay or Android Purse. They went with Pay.

68. tedkord

Posts: 17307; Member since: Jun 17, 2009

Few people knew what it was because it wasn't really usable most places. They're chanting the name because they're changing both the branding and the functionality.

51. tedkord

Posts: 17307; Member since: Jun 17, 2009

I would add that everyone knows Maps means navigation on a smartphone due to Google Maps, the often copied, never equaled smartphone nav app which had become the standard.

53. Ninetysix

Posts: 2962; Member since: Oct 08, 2012

I wonder why Pay is now the standard and not Wallet...

59. tedkord

Posts: 17307; Member since: Jun 17, 2009

The standard? Its a common word that really means only one thing. I know Apple owns basic geometric shapes and colors, but I didn't realize they owned common words, too. I was probably confused by the court telling them they can't own the term app store.

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