Google Pay has added PayPal integration for online merchants (PYPL, GOOGL)

Online merchants that accept Google Pay in 24 countries will now be able to accept payments from PayPal through the mobile wallet, per TechCrunch . Eligible merchants can make a small code change to begin accepting PayPal through Google Pay, as long as the wallet's already enabled on the company's site.

US Mobile Wallet Monthly Engagement Business Insider Intelligence

This furthers a previous collaboration between the services, which enabled PayPal as a funding mechanism within the wallet and allowed Google Pay customers to pay with PayPal for Google-owned services, like YouTube and Gmail.

Here's what it means: This integration could help further decrease fragmentation among mobile wallets, particularly at checkout, to boost adoption of Google Pay.

Expanding its collaboration with PayPal allows Google Pay to offer a streamlined and popular payment option.Google Pay may be able to recruit more of PayPal's 277 million active accounts to its service by promising a faster, more convenient checkout process that still uses PayPal. The integration could also help PayPal by connecting it with Google Pay merchants it hasn't worked with before, helping it grow its valuable merchant base, which comprises just 8% of the firm's total users but represents 90% of its volume.
This can help Google Pay combat the issue of fragmentation in the digital wallet space, particularly at checkout.Consumers and Android users in particular have an overwhelming variety of wallets to choose from, potentially causing them to use only a few or even none at all. PayPal's popularity and familiarity may help Google Pay stand out and boost its adoption, in addition to mobile wallet usage overall. With the checkout process fragmented as well there are multiple buy buttons, digital wallets, and other payment options available to consumers combining efforts with PayPal could help both parties cut through the cluttered space.

The bigger picture: Google Pay needs to make moves like this integration to improve its adoption and position in the market.

Although Google Pay hit 100 million downloads in April 2018 a few months after its rebrand from Android Pay its engagement is still struggling.Google Pay counts relatively low engagement and made up just 6% of US mobile wallet transactions, compared with 77% and 17% from peers Apple Pay and Samsung Pay, according to data from Auriemma Consulting Group reported in October 2018.

Google's been bolstering its mobile wallet's capabilities: It can be used to pay for food orders now and is connected to Gmail and wallet users' account data two moves that boost its utility and potentially improve adoption and engagement.

Leaning on PayPal's popularity is another effort to make the wallet more attractive, and it can certainly help since PayPal users may be receptive to the possibility of faster and frictionless checkout considering merchants' struggles to offer easy mobile checkout experiences.

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