What is Google Pay?

Along with Apple Pay and PayPal, Google Pay has helped reshape digital payments in recent years, giving banks across the DACH region new ways to make transactions smoother.

Google Pay boasts over 150 million active users globally. While India leads in transaction volume with a 36% market share, adoption in the DACH region is accelerating rapidly - over 26% of German businesses now support Google Pay.

In Germany, around half of all consumers used a digital wallet for online shopping. And it’s not just younger, tech-savvy demographics using the payment platform. Of those who paid merchants for online purchases within the last year:

• 39% were Gen Z
• 52% were Millennials
• 53% were Gen X
• 47% were baby boomers or seniors

This trend may be helped by Android’s dominant position in the DACH market. But it could also suggest a societal shift towards cashless payments.

Google Pay is a digital wallet platform that allows users to carry out transactions in two key ways:

• Contactless payments: Users can simply tap their smartphone to make NFC-based transactions at stores large and small, including major DACH retailers like Edeka and REWE. Authentication is confirmed using biometrics or PIN.
• Online checkout: The platform enables one-click payments on merchant websites, helping to improve the user experience and boost conversion rates.

When a customer adds a card to Google Pay, the actual card details aren’t stored on the device. Instead, the system creates a device PAN (token) that represents the card. This tokenization process requires cooperation between the bank, Google Pay and a payment network like Visa or Mastercard.

Here’s how the transaction process works:

• Google Pay sends a token along with a one-time security code to the payment terminal or online merchant.
• The merchant forwards this information to the payment processor, which replaces the token with the actual card details before sending the transaction to the bank for authorisation.
• The bank then verifies the transaction and sends approval back through the same chain.

To implement Google Pay smoothly, banks typically partner with a Payment Service Provider (PSP) or a payment specialist like G+D Netcetera to handle the technical aspects of tokenization and authentication.

Google Pay implements several layers of security to protect users, merchants and card issuers:

• Device PAN: Rather than sharing actual card details with merchants, Google Pay uses tokenization to generate unique identifiers for transactions.
• Biometric authentication: Users must set up biometric security (e.g. fingerprint or facial recognition) to authorize purchases, adding an extra layer of protection.
• Remote lock/erase: If a user’s smartphone is lost or stolen, they can remotely lock or erase it using Google’s Find My Device service to prevent unauthorized access.

Google Pay’s security features also comply with PSD2’s Secure Customer Authentication (SCA) requirements and Payment Card Industry Data Security Standard (PCI DSS).

Banks in the DACH region can integrate Google Pay in several different ways, each with their own implementation requirements and benefits:

• Direct API implementation: Banks can implement Google Pay within their web and mobile apps by following Google’s API integration steps.
• White-label Mobile Wallet: Banks can deploy a brandable mobile wallet solution that supports Google Pay, enabling fast time-to-market while maintaining bank branding. G+D Netcetera’s ToPay Mobile Wallet is one such solution, allowing banks to easily implement Google Pay alongside other payment options.

G+D Netcetera ToPay Mobile Wallet with integrated Google Pay enables banks a quick and efficient modular solution for their desired payment gateway.

With over 25 years of payments expertise and deep knowledge of the DACH market, G+D Netcetera helps banks implement ToPay Mobile Wallet with integrated Google Pay with quick Time-to-Market, fully customized with bank branding and compliant with your regional regulations.

Want to learn how G+D Netcetera can help your bank integrate Google Pay? Get in touch with our experts.