Google should consider taking a smaller cut from fees for Android Pay with credit card issuers, according to IHS Technology analyst Siyun Zeng.
Apple Pay’s slow rollout – it is available in only two countries a year after launch – highlights how hard it is to secure agreements with local banking partners, she said in an analysis of the mobile payments market.
For Android Pay – which recently debuted in the US – to have a faster take-up, it should consider lowering the share it takes from fees with credit card issuers.
“Outside the US, revenue share with credit card issuers will be one of the deciding factors for who wins the mobile payments game,” said Zeng. Signing up a long list of banks and credit card providers is central for driving adoption.
Media reports, as well as a blog this week by Gemalto, have said Android Pay is already free in the US, although Zeng told Mobile World Live there is no official confirmation from Google.
However, neither Apple nor Google rely on the revenue from payments for their core businesses, but rather to bolster their central activities – devices and advertising.
Android Pay works with all NFC-enabled Android devices running KitKat 4.4+ with any US carrier. NFC-based payments were formerly offered via the Google Wallet app, which was absorbed into Android Pay. Google Wallet is now spun off into a separate app for peer-to-peer (P2P) payments, which users will need to download.
“This requirement is likely to cause confusion for users,” said Siyun. The new Google Wallet will have to be simpler and be more convenient to compete with strong rivals including PayPal, Square Cash and Venmo, as well as Facebook and Snapchat which have enabled in-app P2P payments, she said.