As expected by many people following the I/O developers conference, Google unveiled a new mobile payments system that eerily resembles Apple Pay.
Even its name sounds very much like its main competition. Dubbed Android Pay, the new system is more of a rebranded Google Wallet, the NFC-based mobile payments system Google launched in 2011 that was met with not as much success as Google would have liked, with a brand new design and a number of tweaks and new features for good measure.
Like Apple Pay, Android Pay can be used to pay for purchases made inside brick-and-mortar stores and apps and websites. Google says it has partnered with 700,000 retail locations equipped with NFC-based terminals, many of them upgrading to the new equipment thanks to Apple's powers of persuasion. Some of these stores that will accept Android Pay upon launch are Whole Foods, McDonald's and Best Buy, which now also accept Apple Pay, while Uber, OpenTable and Chipotle are some of the apps that will include support for Android Pay early on.
Both payments systems are enabled by Near-Field Communications (NFC), which lets the user place his smartphone over the terminal to make a payment. There's a slight difference over how this is done though. With Android Pay, users simply unlock their smartphone and tap to pay, while Apple Pay adds a bit more security by requiring the user to scan his fingerprint before completing the payment. If Android Pay users have a screen lock PIN, then they also get an extra layer of security before enabling the transaction.
On the inside, both systems use a secure method of generating random numerical codes for each transaction instead of sending the user's credit card number to the merchant. Apple uses a Secure Element chip for this process, while Google says it uses "industry standard tokenization" or Host Card Emulation (HCE) technology, which can also use a Secure Element, which Android Pay does not use. The difference is that it makes Apple Pay a bit more secure than Android Pay, but Android Pay is still better than the same old magnetic credit cards.
One notable difference between the two systems is for whom they are available. Apple has typically limited Apple Pay to owners of the new iPhone 6, iPhone 6 Plus and the Apple Watch linked to an iPhone 5 because these are the only devices that support NFC. Android Pay, on the other hand, will be available to "seven out of 10" Android device owners when it comes out later this year, according to Google, to all devices equipped with NFC and running on Android KitKat 4.4 and up.
Key to a larger penetration is the full support of banks, payment networks and wireless carriers, which were not ready for Google Wallet when it first came out four years ago. Now, Android Pay is in a much better place with the support of Visa, MasterCard, American Express, Discover and several major banks as well as Verizon, AT&T and T-Mobile, which all rejected Google Wallet for carrier-backed Softcard, a failed mobile payments system purchased and shuttered by Google earlier this year.
All in all, there really is not that much of a difference between Android Pay, which is simply a sleeker, more secure version of Google Wallet, and Apple Pay. With Android Pay offering support for more Android devices, we can expect wider adoption by more users, but we have yet to see how all this pans out.
The only potentially remarkable difference between the two is if Google provides full support for Hands Free, a contactless payment system that lets customers pay simply by telling the cashier "I would like to pay with Google," no cards, smartphones or smartwatches needed. The technology is still in the works and will be rolled out for beta testers at Papa John's and McDonald's stores in San Francisco sometime in the near future, but Google has not announced any plans yet about integrating Hands Free into Android Pay.
