CHICAGO — First-generation mobile wallets found themselves in an "unfair fight" against the likes of Starbucks and its branded mobile pay and loyalty system, forcing Google to rethink how it would position Android Pay, Google executive Jack Connors said.
"The early wallets with tap-and-pay were kind of cool, but not very valuable in the longer term," said Connors, who leads Google's merchant partnerships for Android Pay.
In announcing Android Pay earlier this year, Google knew it had to approach the mobile wallet concept in a different manner than the 2011 first generation of Google Wallet, which ultimately lacked key ingredients such as financial institution and merchant support, as well as consumer adoption.
A change had to come in the form of Android Pay operating as more of a conduit for merchant in-app payments and loyalty, while Google Wallet would still exist as a place to store payment and personal credentials, Connors said during a Sept. 1 presentation at the 2015 Mobile Payments Conference.
"Apple Pay, Google Wallet, none of us can provide merchant value because we are not the merchant," Connors said. "Mobile wallets have to offer what the merchant would and play nicely with merchant apps."
Much speculation has swirled as to when Android Pay would be available for consumers and merchants, but Connors could not reveal a specific launch date. He only noted that it would be "soon" and acknowledged rumors have persisted as to when that might be.
Android Pay will deploy some of the technology used in the defunct Softcard Wallet, a mobile pay telco joint venture that Google acquired in February, around the same time it revealed Android Pay as a developer tool.
The acquisition of Softcard did not influence Google's strategy in making Android Pay a software for easier use of merchant's payment and loyalty apps, but it did spark "an acceleration to deploy" the company's answer to the failed Google Wallet, Connors said.
A "Buy with Android Pay" button will initiate in-app payments, while a user making an in-store purchase would first unlock the phone with a PIN, pattern or biometrics for tap-and-go payments or to move a non-payment credential, such as rewards points or a special offer, to the point of sale.
"We want people to use the merchant apps," Connors said. Android Pay can also help drive loyalty, such as at a Coca-Cola vending machine where a user can pay for the soda with money or points from Coke rewards program.
Users can also save gift cards and loyalty offers through a "Save to Android Pay" button.
"The user is always in control of his data," Connors said. "We don't get any user data. We are using a payment token and pushing it forward."
The Android Pay app will also operate on Samsung phones, Connors said, meaning consumers will have a choice to use Android Pay or Samsung Pay on those phones.
Apple, Samsung and Google are finding the 2015 mobile landscape much easier to enter than when Google Wallet tried to launch four years ago, Connors added.
With EMV chip-card technology adoption growing in the U.S., many merchant terminals are also accommodating Near Field Communication contactless technology. Four years ago, NFC sightings were rare.
Apple Pay has built an awareness, but other mobile commerce technology is also fueling the use of smartphones for far more activities than in the past.
But all of those appealing factors are not enough to drive usage without a value proposition, Connors said.
"We have to extend the merchant value proposition in the merchant's own apps because the merchant app is the center of the universe," Connors said.
If there is anything keeping consumers from interacting with a merchant app, "the mobile wallet bridges that gap," Connors added.