Google makes Android Pay Transactions fees free to take on Apple Pay

Welcome to the Google’s new mobile phone payment service, Android Pay, will not garner any transaction fees from credit card companies, which may put pressure on competitor like Apple to drop or lower down its charges, the Wall Street Journal reported.

Apple Pay, which launched last year, reached deals with big banks and other credit card issuers to receive 0.15 % of the value of each credit card transaction, the journal said on Friday. Apple is collecting a 0.5% per purchase on bank debit cards, it said.

Google’s service will not receive anymore fees for the transactions, the newspaper reported, citing unidentified people familiar with the situation. It said Visa Inc and Mastercard Inc have already made their “tokenization” card-security service free, which prevents payments services from charging fees to issuers.

“There is one agreement with Visa and the banks can have confidence that there are no pass-through fees,” Visa President Ryan McInerney reported to the newspaper.

The Wall Street Journal said the rules may prompt changes in Apple’s mobile phone payment deal with banks. It said some banks are really not happy about sharing fees and would try to use Google’s arrangement to effect changes in Apple’s deals.

Google had already unveiled Android Pay at its Google I/O 2015 developers’ conference in late May. The service is aiming at ramping up the Mountain View giant’s challenge to Apple in mobile payments.
Android Pay will bring together mobile carriers, payment networks, banks and retailers to allow smartphone users to use their handsets instead of payment cards.

Google engineering vice president Dave Burke said Android Pay will be working in more than 700,000 US retail outlets that would accept contactless payments.

“We are at the start of an exciting journey, we are working closely with payment networks, banks and developers,” he said.