TMG Director of Digital Strategy reacts to Google’s digital payments news

DES MOINES, IA (June 1, 2015) — Following Google’s unveiling of its new Android Pay and updated Google Wallet product on Thursday, TMG’s Brian Day, director of digital strategy, offered the following insight.

In 2014, Apple brought mobile payments to the mainstream with its introduction of Apple Pay. In 2015, competitors are jumping into mobile payments to facilitate consumers’ desire to use mobile devices to make payments at the point-of-sale. Already this year, we have seen a series of responses to Apple Pay: PayPal purchased Paydiant; Samsung announced its upcoming mobile payments product Samsung Pay; and Google acquired Softcard. Last week, we got an even clearer picture of how Google intends to compete as mobile payments gain momentum with both merchants and consumers.

With Google’s confirmation of Android Pay as an open API, the market became even more exciting. An open API, unlike a proprietary API, paves the way for more developers to build payments functionality into their own apps, including mobile banking apps. TMG has long contended the market winners in digital banking will be those that combine banking and payments functionality. Consumers want one clear view of their complete financial picture. The credit unions and community banks looking to provide that may find an easier path with the release of Android Pay.

In terms of consumer access, Android Pay will come pre-installed on devices with the latest operating system (Android M) and will be capable of both in-app and in-store transactions. Ironically, the same carriers with which Google once butted heads to offer a mobile wallet tool (AT&T, Verizon and T-Mobile) will now pre-install Android Pay on their devices, likely including the Samsung Galaxy units. In comparison, Apple Pay is only available to iPhone 6 and 6s owners, limiting its reach.

As far as merchant acceptance goes, Android Pay and Apple Pay appear to offer similar numbers, each citing 700,000 merchant locations as places consumers can use the NFC-enabled mobile wallets. The only contender that may be able to offer greater acceptance is Samsung. In addition to NFC, Samsung Pay uses Magnetic Secure Transmission, the same technology used by credit and debit cards today. Thus, it’s expected to work at 90 percent of the country’s terminals.

For credit unions and community banks, the rollout of Android Pay means one more option for giving cardholders access to emerging solutions. TMG began working directly with Google in 2011 to ready our clients for enrollment in the Google mobile payments solutions. Since then, we have developed simple, affordable processes that make it easy for community financial institutions to allow their cardholders access to innovative payment solutions.

Preparing credit and debit cards for tokenization is a first step toward playing in the wallet space. Having already taken more than 25 percent of our issuer clients through the tokenization process, TMG has established simple steps for enrolling both credit and debit portfolios quickly and affordably. In fact, to date TMG clients enrolled in Apple Pay have saved more than 60 percent on implementation costs, and TMG clients account for roughly 10 percent of all financial institutions enrolled in Apple Pay. Leveraging this experience and the efficiency of its processes, TMG is poised to help community financial institutions usher in Android Pay.

Where Android Pay appears to have another competitive advantage, at least for the moment, is in the area of rewards. With Android Pay, Google is re-introducing loyalty to mobile payments on a wide scale and is even allowing select retailers to integrate their own rewards programs with Android Pay. Apple is expected to roll out enhancements to Apple Pay soon, and one of these is rumored to be the inclusion of a loyalty component.

In what could be another bonus for credit unions and community banks, Android Pay will not require the same fees as Apple Pay. As just announced by Visa during its launch of the Visa Digital Enablement Program (VDEP), no pass-through fees between technology partners and financial institutions will be allowed.

So how does Google Wallet fit into the picture? Based on Thursday’s announcement, the technology is now purely a person-to-person (P2P) payments tool transmitting funds between the debit accounts of users. It will not allow for mobile point-of-sale transactions. P2P functionality is not currently offered in Apple Pay or Samsung Pay, and Google Wallet is available to both iPhone and Android – and Gmail – users.

The long-term impact of Apple, Google and others like Samsung remains to be seen; today, however, it’s clear they are generating a great deal of momentum around mobile payments. As more consumers carry handsets with mobile payment options and more merchants begin to accept them, the closer we get to widespread adoption of a new way to pay. All indications are the payments industry is seeing the beginning of enduring disruption.

About TMG

TMG (The Members Group) is dedicated to creating customized, technology-driven card processing and payment solutions for credit unions and community-based financial institutions across North America. Innovations in fraud management, loyalty programs, alternative payment systems and analytic reporting, and the competitive advantages they create, have helped TMG forge a new standard in offering cutting-edge credit, debit, ATM, prepaid card products and a P2P payment solution. For more information, visit

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