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Google tries to crack formula for invisible payments with Hands Free app

March 4, 2016

McDonald's is testing the Hands Free app

McDonald’s is testing the Hands Free app

Android Pay is still hoping for takeoff, but Google already has its sights on the next generation of alternative payments with a hands-free solution being piloted by McDonald’s and Papa John’s.

The strategy – leveraging a smartphone application, location services and a cashier to authenticate a purchase without the need to pull out a phone or card – has been tried before without much success, although the timing may not have been right. Now that mobile payments are beginning to catch on – with Android Pay facing stiff competition on multiple fronts – Google is angling to be ahead of the curve on what it hopes will be the next phase in payments.

“The timing is better, but I am not sure the early results will be,” said Jim McLeod, emerging payments practice lead at Carlisle & Gallagher Consulting Group. “There is certainly even more attention to, and investment in, alternative payment methods today and Google is clearly a big brand who has invested heavily in this space.

“Will a new announcement – payment method ­­– from Google separate from Android Pay gain adoption in the near term? I think it is unlikely,” he said.

“I love the idea of invisible payments and the convenience that it provides; especially for high-volume, low-ticket transactions,” “The biggest concerns will be security. What measures are being put in place to mitigate fraudulent account opening and transactions? This is the big worry and unknown for most customers.

Look ma, no hands!
Hands Free is a new app from Google that enables users to make in-store payments without having to reach for their phone or wallet. The app is separate from Android Pay.

McDonald’s and Papa John’s are among a small group of merchants piloting the new hands-free mobile payments application.

To use Hands Free, consumers must download the app and provide their credit card and/or debit card information.

Screen Shot 2016-03-03 at 4.05.03 PM

The app uses Bluetooth low energy, Wi-Fi, location services and other sensors on a phone to detect when users are near a participating store.

When users are ready to make a payment, they tell the cashier, “I’ll pay with Google.” The cashier confirms a shopper’s identity via his or her initials and photo on the Hands Free profile.

Visual identification
Select stores are taking the strategy a step further, experimenting with visual identification to further simplify the checkout process. Using an in-store camera, the user’s identity is automatically confirmed from a profile picture.

To drive trials for the app, Google is offering a $5 discount that is applied to a user’s first Hands Free purchase.

Screen Shot 2016-03-03 at 4.05.08 PM

Google has put several safeguards in place to protect Hands Free users’ data. The app does not share full credit card numbers with stores. This information is stored and shared only with the payment processor.

Cashiers can only charge users when their phone is detected. Users receive instant notifications after every purchase.

For the smaller visual identification pilot, all images and data from the in-store camera are deleted immediately and cannot be accessed by the store.

Hands Free is currently available as part of a limited public pilot in a small number of stores in the South Bay area outside San Francisco.

The app is available on Google Play and the Apple App Store.

Finding a foothold
Google has made several attempts to gain a foothold in mobile payments. Google Wallet struggled and was replaced with Android Pay, which, so far, is not gaining as much attention as Apple Pay and Samsung Pay even though the solutions are fairly similar.

The hands-free approach was tried by Square with its Square Wallet in the past and then discontinued several years ago. However, mobile payments adoption was still quite low at that time. Now that more consumers are aware of and using mobile payments, Google hopes the Hands Free app will have better luck.

At the same time, the technology company is also trying to get its Android Pay solution off the ground.

“Google’s Android Pay has been doing ok, but has issues similar to Apple Pay and the other tech mobile wallet offerings to convince people to continue using the mobile wallet,” Mr. McLeod said. “Most of the attention/marketing has focused on Apple Pay, Samsung Pay and a few others.

“As more attention and investment continues to pour into this space, Google will continue to be at the forefront of the discussion,” he said. “What Google’s overall strategy is remains to be seen, but I welcome all players and methods to this sector. As they say, the high tide raises all boats.”

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