How Android Pay gave itself a new identity

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CHICAGO — On the surface, Android Pay may not seem that different from the Google Wallet launched four years before it. Ultimately, it took the failure of multiple mobile wallets for Android Pay to find its own path.

Google Wallet's mistake was that it demanded too much too soon. Carriers weren't on board — they had their own Softcard Wallet to support — and only one issuer (Citigroup) was willing to jump through the hoops to participate. Google also tried to make Google Wallet a jack-of-all-trades app, supporting P-to-P payments and a plastic card on top of basic mobile payments. It was too much for banks, merchants and consumers to handle.

When Softcard failed, Google took over its technology, and largely shut down Google Wallet to build Android Pay as a more focused alternative. By that time, Apple Pay was on the scene, and though Apple Pay seemed fairly bare-bones at its launch, it still had a wide range of banks and retailers supporting it.

Android Pay's purpose today is to clear out the clutter of the mobile wallet landscape — and that strategy is working, according to Jack Connors, head of commerce partnerships for Android Pay at Google.

The potential of Android Pay is on full display in the company's partnership with Panera Bread that incorporates the capability to store a Panera loyalty card in the Android Pay wallet and send targeted offers the consumer from the bread company, Connors said.

In the past three years, merchants have gone from the mindset of mobile wallets competing with their own apps, to one in which they now are realizing those wallets can help them reach more customers, Connors said during the annual Mobile Payments Conference.

"If you are not Starbucks or Amazon, it's very hard to get the consumer to have a retailer app on their phone," Connors added. "So the vast majority of consumers may not have a digital connection to certain merchants. They just walk up and down the aisles of the store, but the retailer should have the opportunity to tell that customer about the deals in the store at that time."

In that regard, retailers are best served by working with the mobile wallet that consumers are most likely to have on their phone already.

When working with retailers to have Android Pay complement their own apps, Google positions its mobile wallet as an "engagement opportunity" rather than a payment vehicle.

"It can be a personalized mobile engagement channel," Connors said. Once a consumer obtains a loyalty card from the merchant, they can store it in Android Pay and receive personalized messages, a process that fuels user acquisition and sales growth, he added.

Google also designed the application interface in Pay with Google to solve the consumer problem of trying to input payment card credentials on a mobile device when shopping online.

"Buying something with a credit card on a mobile device is a real hassle, on average about 120 taps on the phone," Connors said. "When the user taps Pay with Google, all of the cards associated with the consumer's gmail account come up, they pick a card and make a purchase."

Even with these advancements, Google is not trying to position itself as the savior for merchants that may still be sore from seeing the Merchant Customer Exchange initiative and its CurrentC mobile wallet fall apart.

The merchant venture collapsed two years ago after nearly three years of work and investment in trying to develop a wallet that would link to a consumer's bank account and bypass payment card interchange fees and keep merchant data in-house.

"Is this the CurrentC 2.0? I think that 'no' is the short answer," Connors said. "We are not viewing this as a payments thing primarily. Plus, we are not looking to compete with the payments networks, we are looking to work with them."

Android Pay won't affect the cost of the payment acceptance, but instead will affect "all of the goodness that happens on top of the payment — acquiring new users, driving information, and creating a higher utilization of those programs," Connors added.

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