|The system uses Near Field Communication technology, which is already embedded in most Android phones. A growing number of store-payment terminals include NFC technology; Google Wallet service worked on some of these, although the process was more cumbersome.|
Google Unveils Apple Pay Rival
Android Pay uses technology already embedded in most Android phones
By Alistair Barr
The Wall Street Journal
Updated May 28, 2015 3:42 p.m. ET
Google Inc. GOOG -0.00 % revised its mobile-payment service Thursday with new partners--including wireless providers, payment networks, retailers and banks--stepping up competition with Apple Inc. AAPL -0.20 % in an area with big promise and multiple challenges.
Android Pay software is included in the new version of the Android mobile-operating system, showcased at Google’s I/O conference in San Francisco. Google said the payment service will be available in coming months and will work with previous versions of Android, beginning with KitKat, which came out in 2013.
Android Pay doesn't need a separate app to work on Android phones, unlike Google’s previous troubled mobile-payment efforts under the Google Wallet name. Users will be able to load their credit, debit and loyalty cards onto the phone, unlock their device with their existing password and tap to pay at more than 700,000 physical stores in the U.S., the company said.
Participating retailers include McDonald’s, Macy’s, Best Buy, Walgreen and Whole Foods, Google said.
The system uses Near Field Communication technology, which is already embedded in most Android phones. A growing number of store-payment terminals include NFC technology; Google Wallet service worked on some of these, although the process was more cumbersome.
The new Android operating system will support fingerprint scans to unlock phones and authorize payments, much as Apple has done with its iPhones and Apple Pay service. Google said phones with fingerprint readers will be available later this year.
Like Apple and other tech companies, Google sees payments as a way to embed itself more deeply in users’ lives. Google also hopes mobile payments in stores will help it gather more information about users’ purchases, which may show the effectiveness of Google ads.
Mobile payments have struggled to catch on with consumers because swiping a credit card in a store is already quick and easy. Apple Pay, which began late last year, began to change that view and has proved popular with some consumers. It also sparked other technology companies to update their payment offerings.
Apple gets paid for its payment service through a cut of transactions from the issuing bank of the credit card being used, or a flat fee on debit cards.
It isn’t clear how Google will get paid for the Android Pay service. An executive and a spokeswoman at the company said Thursday that the goal is to make Android phones more useful. The spokeswoman declined to comment further.
Google is using similar security technology as Apple, called tokenization, to protect users’ credit-card information. The technology replaces card numbers with one-time random codes, so if payment details are stolen they are un-useable.
Google said Android Pay will work through the Visa, MasterCard, American Express and Discover payment networks.
Big bank card issuers in the U.S., including J.P. Morgan Chase, Bank of America and Capital One, are planning to take part in Android Pay, according to a person familiar with the service.
Android Pay also will work within certain bank apps, and USAA’s banking division is an early partner, Google said.
Google said new Android phones from Verizon, AT&T and T-Mobile will include Android Pay.
Write to Alistair Barr at firstname.lastname@example.org