Google will have to explore other avenues to earn money from its recently announced mobile payments service, Android Pay. Unlike rival Apple Pay, Android Pay will not earn Google a percentage of each transaction processed via the payments service.

According to a report from The Wall Street Journal, this is “because Visa Inc. and MasterCard Inc., which operate the dominant payment networks, recently standardized their ‘tokenization’ card-security service and made it free, preventing payments services from charging fees to issuers.”

Tokenization, when applied to data security, says Wikipedia, is the process of substituting a sensitive data element with a non-sensitive equivalent, referred to as a token, which has no extrinsic or exploitable meaning or value.

In the case of mobile payments, tokenization replaces sensitive credit card details with a unique code – a token – that can only be used once. In this manner, credit card details are never transmitted or shared with merchants, adding an extra layer of security.

SiliconAngle, June 8, 2015
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