A Mobile Payments Latecomer, Android Pay Enters a Still Wide-Open Spain - eMarketer

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A Mobile Payments Latecomer, Android Pay Enters a Still Wide-Open Spain

Big potential for a system tied into the country’s favorite operating system

July 27, 2017

Google launched Android Pay this week in Spain, the mobile payment system’s 14th market—and one where the adoption of contactless payments via smartphone has yet to take off in a meaningful way.

As it does elsewhere, Android Pay works anywhere contactless payments are accepted; in Spain, that’s over 1 million stores, according to Google. In addition, it functions as a payment mechanism in third-party apps, including those of Barcelona-based budget airline Vueling and homegrown fashion retailer Zara.

At launch, the payment system is only available for Visa or MasterCard debit or credit cards issued by Bilbao-based bank BBVA. But more banks are expected to offer the service.

Google has arrived relatively late to the proximity mobile payment party in Spain. Samsung Pay launched in the country in June 2016, and Apple Pay followed that December. But neither has significantly changed the way consumers pay via their smartphones.

A study by the Interactive Advertising Bureau Spain (IAB Spain), which examined the state of the country’s mobile payments market in September 2016, found only 11% of internet users ages 16 to 65 had made a contactless payment via mobile phone. That percentage is likely to have risen, considering Apple Pay had yet to launch in Spain at that point in time, but Android Pay could have an even bigger effect on adoption provided more banks are brought on board.

Android is undeniably Spain’s preferred smartphone operating system. Its share of advanced handset sales as of December 2016 was 87.2%, according to Kantar Worldpanel data, continuing a trend that since 2012 has seen Android power at least eight in 10 smartphones purchased in the country.

Smartphone Sales Share in Spain, by OS, June 2012-Dec 2016 (% of total)

In addition to tapping into a massive potential audience, Android Pay is wading into a country where internet users appear more open to the idea of mobile payments than their peers in some other markets in Europe.

ING and Ipsos data from as far back as April 2016 found 39% of mobile device users in Spain had used a mobile payment app—the second highest rate after Italy among the nine countries in Western Europe studied. A September 2016 look at Europe’s mobile payment usage habits by Visa and Populus saw, however, that those mobile payments didn’t typically involve contactless in-store transactions specifically—instead they were primarily for activities like transferring money to friends and family, paying household bills or buying bus and train tickets.

Nonetheless, an August 2016 study by Schibsted Media Group found 74% of mobile payment users in Spain said they felt “very” or “fairly secure” about using mobile payments, so expanding usage to in-store proximity payments isn’t likely to meet much resistance based on safety concerns.

In fact, Schibsted’s study found the top reason mobile phone owners in Spain hadn’t used mobile payments was simply because they “haven’t had the need” to do so. But Android Pay’s eventual availability across most of Spain’s smartphones could see an increasingly ubiquitous payment option drive up consumer adoption—more out of curiosity and cultural evolution than as a result of any real convenience factor or financial compulsion.

—Cliff Annicelli


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