Google Inc. (NASDAQ:GOOG) has recently announced its much awaited prophesy Android Pay, a mobile phone payment service at the Google I/O this year. However, the Android Pay won’t charge any transaction fees from online credit card companies, which will surely pressurize competitor Apple to chop off its rates, Wall Street Journal reported.
According to the Wall Street Journal, Google will not gain any transaction fee for payments made from its online mobile platform. But, the Google’s mobile payment service was launched foreseeing hassle free consumer transactions while paying for goods and services to retailers.
In order to excel among the vague competition already i.e., already available and forthcoming too, Apple Inc’s Apple Pay, which was unveiled last year, made an agreement with big banks and other credit card issuers to receive 0.15% of the value of each credit card transaction.
Visa President Ryan McInerney said in the Wall Street Journal as,
“There is one agreement with Visa and the banks can have confidence that there is no hidden transition fee.”
While Google may not have been successful in coming to terms with the banks, the same banks may end-up using Apple’s services change course towards Google’s no-fee service compelling Apple into cutting down or at the very least lowering their fee percentage gained for each and every transaction made by the payment system.
In the meanwhile, Apple comes with a three year contract with the banks out of which roughly only a year has passed, that leaves Apple with quantum time left to collect.
It’s seems a small setback to Android Pay, but this will make a better path for the company, if Google ends up gaining partnerships from more banks down the road this year. People familiar with this situation say that Visa Inc. and MasterCard Inc. have made a pact with the banks and associated service providers for “tokenization” i.e., card-security service free, preventing payment services from charging fees to users.
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