Google’s Android Pay Will Not Collect Transaction Fees From Participating Credit Card Companies

Google has officially dropped transaction fees for credit card establishments engaged with Android Pay, the company’s highly anticipated mobile payments service.

The announcement could force other businesses offering similar services to reconsider their terms with participating credit card issuers. Banks that are unhappy with sharing fees could use Google’s move as an example to gain the upper hand in future deals.

As a basis for comparison, financial companies on board with Apple Pay allow Apple a 0.15 percent share of the total value per credit card transaction. The tech giant collects a half-cent for each purchase made using a bank debit card.

“This is a bold move on behalf of the banks,” said Rick Oglesby, head of research at Double Diamond Payments Research. “They’re now taking a stand against similar deals. It could easily turn into a standoff.”

Visa and MasterCard, two key influencers in the financial sector, reportedly made their “tokenization” card-security services free, which put a stop to charges from payments service providers to affiliated card issuers.

Google unveiled Android Pay during the Google I/O 2015 conference in May, the same day Visa released its updated tokenization feature. The global brand also confirmed that it had partnered with Visa’s newly launched service during the same period.

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

Many expect Google to offer other types of moneymaking arrangements to affiliated banks. Marketing agreements such as logo placement and other promotional terms could help the tech business profit from Android Pay while keeping its services enticing and affordable for consumers.

Google also plans to expand its range of payments products to customer loyalty programs, coupons, and rewards.