Google's new mobile phone payment service, Android Pay , will not garner any transaction fees from credit card companies, which may put pressure on competitor Apple to drop or lower its charges, the Wall Street Journal reported.

Apple Pay, which launched last year, reached deals with big banks and other credit card issuers to receive 0.15 percent of the value of each credit card transaction, the journal said on Friday. Apple collects a half-cent per purchase on bank debit cards, it said.

Google's service will not receive any fees for the transactions, the newspaper reported, citing unidentified people familiar with the situation. It said Visa and Mastercard have made their "tokenisation" card-security service free, which prevents payments services from charging fees to issuers.

"There is one agreement with Visa and the banks can have confidence that there are no pass-through fees," Visa President Ryan McInerney told the newspaper.

The Wall Street Journal said the rules may prompt changes in Apple's mobile phone payment deal with banks. It said some banks are not happy about sharing fees and could try to use Google's arrangement to effect changes in Apple's deals.

Google had unveiled Android Pay at its Google I/O 2015 developers' conference in late May. The service is aimed at ramping up the Mountain View giant's challenge to Apple in mobile payments.

Android Pay brings together mobile carriers, payment networks, banks and retailers to allow smartphone users to use their handsets instead of payment cards.

Google engineering vice president Dave Burke said Android Pay would work in more than 700,000 US retail outlets that accept contactless payments.

"We are at the start of an exciting journey, we are working closely with payment networks, banks and developers," he said.

Written with agency inputs

