Google plans to make the UK its second launch market for its Android Pay mobile payments service. UK Android users with compatible smartphones will be able to make mobile payments in-store or in-app without typing in account details.
Android Pay comes preloaded or can be downloaded from Google Play, the service requires users to store their cards details within the app, and payments will be authorised by a passcode or fingerprint. For in-store users, the service is available in any store locations that accept contactless payments as an alternative to tapping a card on a point-of-sale terminal.
So far Google has confirmed deals with the main card issuers Visa and MasterCard, allowing the Android Pay service to integrate their card details. Deals have also been struck with UK financial institutions including: Bank of Scotland, First Direct, Halifax, HSBC, Lloyds Bank, M&S Bank, MBNA and Nationwide. Santander also plans to support the service by the end of 2016. Notable absentees from this list include: American Express, Barclays and Royal Bank of Scotland.
In order to maximise its adoption by UK users, it is integral that Android Pay has a solid foundation of supporters upon launch of the service. These supporters include financial institutions, retailers, and payment platforms.
Regarding the retailers, Android Pay will be available everywhere that contactless payments are accepted, such as Costa, Starbucks, Waitrose, and Boots. Significantly, Android Pay will be compatible with Transport for London, allowing people to pay throughout London on the Tube, buses, and trains. Public transport integration has historically been a major driver for adoption of mobile payment services. In addition, Android Pay for in-app commerce payments will drive its adoption even higher with support already declared from JD sports, Zara, and Deliveroo apps. This enables users to complete payments across a range of apps without having to register new cards and billing information.
The UK Android audience provides a strong opportunity for growth
Given that Apple Pay is only available to iPhone users, the digital wallet market for Android is relatively clear for Android Pay’s entry. Samsung Pay, the main competitor but only for Samsung devices has not yet launched in the UK. Ensuring a widespread roll out of Android Pay helps Google maintain feature parity with iOS and therefore will give Android users less reason to switch platforms.
The UK is an advanced market when it comes to adoption for cards and contactless payments so there is a strong addressable market and infrastructure in place to support the Android Pay roll-out. Android smartphones currently make up 57% of the UK installed base.
Google aims to launch ahead of competition – but country specific deals mean a slow international roll out for mobile payments
Although Android Pay doesn’t compete directly with Apple Pay, the market isn’t completely free of competition. In the Asian market, the leading rival on the Android operating system is Samsung Pay, thanks to its comparatively early launch in South Korea in 2015 and also in the US.
In China, Huawei is planning to cooperate with state-run bank-card processor China UnionPay in launching Huawei Pay. The lack of an official Google presence in China means, as with mobile content, this is a market in which it cannot compete. Apple is finding success there; it reported 3m Apple Pay users in China in March 2016, in two weeks after the launch. The expected UK launch of Android Pay, and the roll out of services in other countries, highlights one of the challenges in launching in-store and in-app mobile payment services; deals have to be struck locally with relevant financial and retail partners. As such, there is a risk that advanced payment features are only made available to users in the most mature or largest markets. At the time of writing, Apple Pay is available in five countries including the US, the UK, Canada, Australia and China. Samsung Pay launched in the US, Korea and China, while Google Wallet is only available in the US.