Android Pay Gets a Go-Ahead from Aussie Banks, Apple Pay?

Android users will be able to make contactless payments in Australia next year. Google has finally rolled out this service in Australia with support from the banks, unlike its Apple rival. Australia becomes the second country where Android Pay will be launched after it was rolled out in the US in May.

A month ago, Apple Pay launched in Australia in partnership with American Express with no bank support. Let us look at the issues that were being faced by Apple in Australia. Apple Pay is based on contactless reader technology and allows users to use their phone or Apple Watch to make a transaction. For every transaction made using Apple Pay, the company takes a certain amount of interchange fee from the merchants. In the US, Apple earns 15 cents for every $100 of transactions. The company was looking for a similar deal in Australia as well, but the big four Australian banks weren’t willing to provide the same amount of interchange fee to the tech giant. Australian banks get 50 cents for every $100 of transactions as compared to the US, where the banks get double the fee. The big four banks of Australia were reluctant to share that amount with Apple as it will lower their revenue. According to these major Australian banks, the payments market in Australia is quite developed as compared to the US and the UK, and the technology on which Apple Pay works has already been in the market for quite some time. Hence, according to them, the value asked by the tech giant is unreasonable.

Announced on Google’s official Australian blog, the company is closely working with many of Australia’s major financial institutions—including ANZ, Westpac, Bank of Melbourne, Bank of South Australia, Bendigo Bank, Cuscal, ING DIRECT, Macquarie Bank, and St. George—with the aim of bringing Android Pay to their card holders in 2016, and will continue to work with more banks throughout the year.

When Android Pay arrives in Australia next year, it will support MasterCard and Visa credit and debit cards. The company is also working with EFTPOS to support their cards in Android Pay.

Aussies will be able to use Android Pay everywhere contactless payments are accepted. Google has called out specific retail partners for the launch of Android Pay like 7-Eleven, Brumby's Bakery, Coles Express, Coles Supermarkets, Crust Gourmet Pizza, Domino’s Pizza Enterprises Limited, Donut King, Gloria Jean’s Coffees, McDonald’s, Michel’s Patisserie, Pizza Capers and Telstra.

The in-app payment feature of Android Pay is a new addition which had set Apple Pay apart from its competitors until now.

Android Pay enables simple and secure purchases in Android apps, and eliminates the need to manually enter payment and shipping information.

Android Pay was built using network tokenization. This innovation provides additional protection for the consumer since their card gets transformed into a network tokenized card—a virtual account number specific to the device—ensuring the actual card number is never shared with the merchant. Network tokenization also provides flexibility for the merchant, as they can still identify the card brand to aid in reconciliation, are never subject to any artificial limits on transaction size and can use Android Pay to perform subscription payments.

In an effort to make the integration simple and seamless, Google has partnered with Braintree. Now, when merchants integrate with Braintree, they will be able to add Android Pay to their checkout with just a few lines of code instead of a separate integration.

Google has also partnered with other payment providers such as eWAY, First Data and Stripe to make accepting Android Pay across stores and apps a breeze.

According to a report by Australian bank Westpac, contactless payments via mobile will reach a value of $3 billion in Australia by 2015. In Australia, mobile-based contactless payments have accounted for 60% of all debit card transactions in the past 12 months. This is obviously a very important reason for companies like Google and Apple to expand their geographic dimensions.