Google will launch a mobile payment service for Android smartphones to compete with Apple's rival system in the UK.
Android Pay will allow smartphone users to take advantage of payment apps provided by banks, credit card providers and retailers to either buy goods in stores or using retailer websites.
The service will support MasterCard and Visa as well as many of the UK's banks such as Bank of Scotland, First Direct, Halifax, HSBC, Lloyds, M&S Bank, MBNA and Nationwide.
The UK is seen by analysts as an attractive market for mobile payments given most people have a smartphone and are increasingly familiar with other contactless ways of paying such as using a debit card.
The UK also has a relatively high proportion of retailers and coffee shops equipped with the necessary contactless equipment to enable mobile payments.
Android Pay can be used to make contactless payments in shops, with a large range of places supporting the technology from Costa Coffee to Waitrose. Android Pay can also be used on the London tube, buses and trains.
Contactless technology
However, the use of contactless technology through the near field communication chip in a smartphone is still far from mainstream.
Android Pay was launched in the US in September last year, and the web services group claims that it signs 1.5 million registrations each month.
Apple took a headstart in the market by launching Apple Pay in the UK last year, while there are also alternative ways to use Android smartphones to pay such as a platform developed by Samsung for its devices.
More than 36 million people have an Android phone in the UK, according to IHS, a research group, but only a quarter of active users have the fingerprint sensors that can make mobile payments quicker than a normal card chip and pin payment using a PIN.
This compares with the 19.1 million people who have an iPhone, although close to half of these are models compatible with Apple Pay with both a fingerprint sensor and contactless capability.
Jack Kent, analyst at IHS, said Apple Pay had sparked renewed interest in the mobile payments market.
Mr Kent said Apple Pay had an advantage of being able to use the wider Apple services ecosystem - such as iTunes payment – but “Google has lagged behind Apple when it comes to getting users to register payment card information which means that it may face a bigger hurdle to widespread adoption”.
He added: “Much of the focus on these new payment services is on the in-store use case, but the ability to drive in-app retail and commerce will be a major factor in the success of mobile payment services.”
MasterCard said that millions of cardholders and Android device owners in the UK will have “additional safe and secure ways” to make mobile payments and purchases. MasterCard says that Android Pay is “simple, safe and secure”.
“The strength of our technology means that consumers can enjoy both security as well as simplicity. MasterCard cardholders can feel confident about using their digital cards for everyday purchases,” said Mark Bardett, president of MasterCard UK & Ireland.
Copyright The Financial Times Limited 2016
