Android Pay Revealed – PLUS Major Token Announcement

28 May 2015

Google unveiled AndroidPay today.

What happened?

  1. AndroidPay = ApplePay without the 15bps from banks. Same tokens and everything.
  2. GoogleWallet is morphing into a P2P Venmo service.. plus Hands Free “Square Card case” see Google URL
  3. Most significant?
    • Google has greatly expanded its footprint up to the silicon to create a secure enclave equiv within ARM’s TrustZone TEE
    • NO 15bps for Google. Google created bilateral agreements with top 5 banks (like Apple) only to be shut down by the new Network programs (VDEP Below) where tokens don’t allow for wallet fees. Google then had to trash 2 years of work (on bilaterals) and remake them for marketing/branding permission (to use Android Pay logo). This means the Apple deal (15bps) will not expand out of the US and will be sunset quickly.
    • Google has made Android Pay part of Google  Mandatory Services (GMS) for next version: Android M (like search, maps, gmail, …)
    • US MNOs have consented to Android Pay as GMS (with rumored economics)
    • Google WINS BIG in bringing retailers along with their plan (Coke, McDonalds, Papa Johns, …) and BEATS Apple to punch with integrated loyalty cards.  Apple gets and F here.. and Google gets an A-.. (Would have been A+ if ready to roll out with McD’s)
    • This means no other NFC wallets on Android in US (phones are locked down)
    • Google is using same token service as Apple.. any issuer can sign up through Visa/Mastercard intranet sites
    • Samsung Pay (or any NFC wallet) is completely screwed in the US.. No wallet installed on the phone. Imagine the problem in getting consumer to 1) Load, 2) Register, 3) USE (with another competing app)
    • HCE is a green light.. but Google is in a place to certify all NFC/SIM based wallets in the Android M architecture . MNOs will need to decide if they want to take the Google carrot and accept the new GMS terms. Or follow in the GSMA/NFC/TSM/SIM based model with no revenue and no control.  Europe and China and Korea will be the most interesting. My guess is that these markets will keep the GSMA/NFC SIM based model..  I’m still trying to process what this means for NXPi, but with the success of HCE and the new TrustZone within ARM it can’t be a good for any silicon specialist.

Side Story… The Banks hate the Apple Pay deal (NEVER AGAIN)..  My friends in mountain view take a meeting with a large bank on AndroidPay “You guys can forget about the Apple Pay deal, it will never happen again, lets start the conversation on what you will PAY for the privilege of having my card in your wallet.”  The Visa VDEP program (and MA’s equiv) addressed this issue. Google did not get the 15bps.. and the Issuers got nothing (exclusivity, revenue, … ).  Per VDEP, If you use the network’s token facilities you can’t discriminate… Cards will be permissioned to any approved wallet. There is also a new iron fence around payment data use.. A VERY VERY big step.

Hands free with McDonald’s could be cool..


Visa reveals Visa Digital Enablement Service (VDEP)

This is a MAJOR announcement, on part with the release of Tokens. The rails and rules for tokens. Think of this as “accept all cards” rule for tokens that is as important as VisaNet itself. A brilliant accomplishment.. WOW.. will write more this weekend.


15 thoughts on “Android Pay Revealed – PLUS Major Token Announcement”

  1. AndroidPay = ApplePay – 15bps from banks, but also + Loyalty program which Merchants have been requesting Apple for quite some time. This allows Merchants some control and relationship back which was lacking in Apple.

  2. Oh yeah, and they get to ride on the momentum that Apple has created with plenty of runway before Samsung Pay hits the street. Looks like the right product at the right time (from the right player)

  3. Tom, could you expand on this a little bit: “This means the Apple deal will not expand out of the US and will be sunset quickly”. Is this a consequence of VDEP? And what about Mastercard?

    In particular in Europe, where interchange will be capped to 0,3%/0,4% (debit/credit) 15 bps would be a prohibitive barrier to enter the market. I actually don’t believe Apple regards Apple Pay as a profit center. Not sure what rode them, but research would have revealed that 15 bps would be a no go for entering Europe. They must have been aware of that before launching Apple Pay. Curious.

    1. In the US Apple negotiated 15bps from the first 5 banks and the rest caved.. This deal will not expand into any other geography… and the 15bps will go away in the US (sunset).

  4. Tom, we are living in interesting times! Please clarify. You state that Google has made Android Pay part of Google Services Mandatory, so this means no other NFC wallets on Android in US. What’s the extent of this restriction? Does it simply lock out any OEM NFC wallet, or does it lock out ALL NFC wallets other than Android Pay?

    1. Multifaceted question.
      1) Android M
      2) MNO Agreements, Google Service Mandatory
      3) HCE

      Take a look at Android technically supports ISO 14443… so technically any OEM or MNO can build a handset with a GSMA wallet. There is not a technical limitation in Android that would prohibit this.

      Google has created a new GSM agreement with android pay as part of it. Do carriers have to agree? of course not.. but it is a double edge sword, not agreeing to Android M + the new GSM agreement means you will not recieve the latest Android updates/capabilities (in app payment, biometrics, …). It is a great big support headache for OEMs and MNOs.. they are left holding the bag on Android support. Some can do it ….

      HCE + Tokens is a new construct supported by the card networks. I have many blogs on the topic. Google provides OEM, Banks, MNOs the API to build payment capabilities into the phone for free. A further BIG advantage is that Visa and Mastercard have set up fast “on ramp” services that drastically simplify card provisioning (all at zero cost to everyone). In essence.. this new approach has greatly reduced the complexity of the entire contactless payments process. My GSMA friends HOWL at how unsecure HCE is (compared to hardware/SIM based payments) but this misses the point. HCE + Tokens + Mobile Auth is far more secure then any piece of plastic out there today. See

  5. You say that Google has beat Apple to the punch on loyalty cards. That might be jumping the gun a bit. Google has only announced Android Pay. It will not be available on Nexus phones until October/November and estimates indicate that it won’t be available on other phones until very late 2015 or early 2016.

    It is possible that Apple will incorporate loyalty cards into iOS 9 which will likely be available in September along with new iPhones. If that scenario plays out, Apple will have beat Google to market even though Google announced the feature first.

    It is also important to note that, if Apple does provide loyalty cards in iOS 9, the service will be immediately available via software update on tens of millions of compatible iPhones.

    When Android Pay is released, how many deployed handsets will be supported? Given that handset vendors are often extremely slow to offer Android upgrades, how do you think that will affect the Android Pay rollout?

      1. Well, I stand corrected. However, I thought the discussion was centered around Android Pay rather than Google Wallet. Android Pay is Google’s response to Apple Pay given that Google Wallet failed to gain the desired level of traction. So, I guess I could reword my response to be more specific and say that it is possible that Apple Pay could still beat Android Pay to market with loyalty cards rather than saying that they could beat Google in general.

        Regardless, I still wonder how quickly Google can roll the service out and get traction. I feel it depends heavily on how many deployed Android phones can support it, how many of those phones will get the upgrade and it what time frame. Do you have any data on how many currently deployed Android phones are capable of supporting Android Pay?

        1. Apple Pay will have store loyalty and reward cards in iOS 9, due about Sept 2015. So I’d venture way over 200m iPhones and Apple Watches will have this Apple Pay capability by the end of 2015.

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