Category: Mobile Payments

Android Pay will not charge transaction fees to card providers

Google has announced that it will not be charging transaction fees on mobile payments made through its new Android Pay platform. The move has to do with competing more aggressively with Apple, who has found significant traction in the mobile payments space. Google will not be receiving a percentage of transactions processed from payment cards, such as MasterCard and Visa, which may make Android pay significantly more attractive to merchants interested in the mobile space.

Tokenization may be the death of transaction fees

Google had initially intended to charge a fee on credit card transactions, as this has become the standard for the mobile payments industry, but opted not to. One of the reasons for this is the growing prominence of tokenization, a security practice that replaces financial information with digital tokens. This practice has been adopted and heavily promoted by both MasterCard and Visa as a way to make mobile transactions more secure. One of the issues with tokenization is that it prevents payment services from charging fees to card providers.

Android Pay may become Google’s default mobile payments platform

In 2011, Google introduced its Wallet platform, which served as the company’s first entry into the mobile payments sector. Google Wallet experienced a relatively rough launch and has struggled to find traction with consumers since. Over the years, Google has been making changes to its approach to the mobile payments market, and the company now plans to launch, making acquisitions to improve its position in the market. In late 2013, Google acquired Softcard, and the company’s technology was used to develop Android Pay.

Downfall of transaction fees may bring more merchants into the mobile payments market

Transaction fees have been a significant challenge for retailers and card providers interested in the mobile payments space. While such fees are nothing new in the world of commerce, the mobile sector is still an unproven market, despite the promise that it shows. As such, merchants are somewhat uncertain about entering in the mobile payments space, expressing concern that this sector may be little more than a passing fancy for most consumers.

The company has now added the ability to accept smartphone transactions through its credit card reader.

Square, the startup company that first drew attention to itself when it created a credit card reader that small businesses and merchants could use in order to accept credit card transactions, has now announced that mobile wallet transactions are being added to its accepted payment methods.

Though the adoption of smartphone payments isn’t expected to take off for a long time, Square will be ready.

The industry feels that there will still be years that need to pass before the mobile wallet becomes a mainstream form of payments transaction. Even though some giants have already offered their own versions of the technology – including Apple, Google, and various credit card and banking leaders – they have yet to take with consumers in any widespread way. That said, some feel – as Square likely does – that by providing merchants with a simple and affordable tool to actually accept these mobile payments, it may boost the feeling of familiarity with these transactions.

In fact, some have speculated that the mobile wallet may catch on even faster if enough processors are put in place.

It was in exactly this light that Square had unveiled its own updated credit card reader that could also accept mobile payments through the wallet apps of various companies, such as Android Pay and Apple Pay, among others.

Square has said that it expects the new version of its mobile payments reader to be broadly available by the fall of this year. It functions wirelessly for small businesses and sellers who want to be able to accept contactless transactions over a smartphone or tablet. That said, it also makes it possible for merchants to be able to accept EMV enabled credit cards, that is the type of plastic card that has an added security chip embedded into it.

The new mobile wallet payments reader will be sold for $49. That said, there will be around 250,000 small and medium sized businesses that will be receiving the readers for free as the company launches the devices and hopes to widen their use right from the start.