Google has partnered with Visa and MasterCard to enable mobile payments via Android Pay at online merchants that already accept the card networks' respective Visa Checkout and Masterpass digital wallet platforms, in an effort to expand Android Pay to more merchants and shoppers.
Android Pay will be available through those merchants starting early next year, and the companies claim it will speed up checkout times, reduce the likelihood of cart abandonment and give customers the flexibility to authenticate their payments with their own preferred manner of identity verification, such as fingerprint recognition.
Pali Bhat, global head of payment products at Google, told CNBC via e-mail, "We see today's partnerships as being hugely beneficial for both merchants and consumers — [enabling] merchants to drive higher conversions without extra development work, while offering online shoppers a frictionless payment experience that no longer requires them to remember passwords/pins, or even open an app."
Perhaps the biggest key to this partnership is the aspect of Android Pay that most distinguishes the platform from rival Apple Pay: It's an open system.
What that means in market terms is that Android Pay can connect with and easily enable payments through a variety of partners, even other companies in the payments ecosystem with their own digital wallet solutions. By aligning with Visa and MasterCard and gaining access to the merchants that accept Visa Checkout and Masterpass, Google is getting new opportunities to grow Android Pay's user base, but it also is investing in the notion of interoperability among payment systems.
While it remains early in the evolution of alternative mobile payment solutions, interoperability between platforms could be incredibly important to growing usage across many of them. If there is one thing we don't want amid the rapid expansion of the payments ecosystem, it's that we don't want customers to be confused by all the new choices. We want them to use the payment apps they are most comfortable with, and if they prefer to use Android Pay through a merchant that only accepts Masterpass or Visa Checkout, it's in the interests of all three companies — Google, MasterCard and Visa — to allow them to do exactly that.
Without some level of interoperability and partnership between platforms, payments companies and retailers are forcing customers to make a decision during checkout that could very well cause them to put off completing a purchase. Google can help smooth that process by working with others. It's something we're not going to see Apple do with Apple Pay because, like everything else Apple offers in the form of devices, apps and features, Apple Pay is a closed system. It's something that has helped Apple grow its own empire, but it's not something that will ever help customers use Apple Pay at merchants that don't already accept Apple Pay. Google in this instance has found a way for customers to use Android Pay even with a merchant that only accepts Masterpass or Visa Checkout.
Meanwhile, Google isn't the only one that gets why interoperability matters. In addition to aligning with Android Pay, MasterCard this week made its own similar announcements enabling Masterpass payments through Microsoft Pay and Samsung Pay. This is acknowledgment by Mastercard that Microsoft Pay, Android Pay and Samsung Pay have carved out enough of a market that they must be taken seriously by retailers and card companies alike. And as with Google's announcement, it's clear that MasterCard understands that interoperability can raise many boats in the payments space. Except Apple's. Apple will have to raise its own boat.