Coverage: What to expect next from Google Pay

Google is expected to unveil new payment products at its developer conference on Thursday. That means that it’s going head-to-head with Apple and its new payments system.

The New York Times story by Mike Isaac and Brian X. Chen had these details about the mobile pay plans for the tech rivals:

The battle for mobile software dominance revolves around two companies: Apple and Google. Now both giants are also going head-to-head in mobile payments, as they prepare to push deeper into digital wallets.

Google is set to unveil plans at its annual developer conference on Thursday for an overhaul of its mobile payment products, according to three people familiar with the situation, who spoke on the condition they not be named because the details are confidential.

Changes include a service called Android Pay that will let merchants accept credit card payments from inside their mobile apps and can be integrated with loyalty programs at retailers, the people said. Google Wallet, a mobile commerce app, will also be reintroduced as a peer-to-peer payments app that consumers can use to send money to each other directly from their debit accounts, they said.

Apple is preparing to announce details about enhancements to Apple Pay at its software conference next month. Those include a rewards program for the mobile wallet service, said two people briefed on the product.

CNET’s Steven Musil said that gaining customer loyalty could be the difference in which firm comes out on top:

The moves highlight the intensifying competition for mobile payments, the ability to pay for goods and services with a smartphone. In addition to deeper entrenchment in the financial services industry, the efforts are seen as an avenue to attract more consumers to the tech giants’ products and services.

Gaining consumer loyalty early may mark the difference in the mobile-payments market, which is expected to grow next year to $27.5 billion in US transactions from last year’s $3.5 billion, according to market research firm eMarketer. The number of mobile payment users in the US is expected to hit 36.2 million next year, more than twice the number using digital wallets in 2014, the researcher said. That pace is expected to continue into 2018, when eMarketer foresees 57 million consumers using their smartphones to checkout at store registers.

While a handful of mobile-payments efforts have been around for the past couple of years, Apple jump-started interest last fall with the introduction of Apple Pay, which allows consumers to make credit card purchases with an iPhone 6 or iPhone 6 Plus. Less than 72 hours after its debut, 1 million credit cards had been used on the service.

Like Apple Pay, Android Pay will use near-field communications, or NFC, a technology that uses an embedded chip to talk with compatible registers. But unlike Apple’s services, Android Pay will not be a standalone app, serving instead as the platform for third-party store and payment apps.

Nathan Ingram wrote for The Verge that Google is moving into the peer-to-peer space, putting it up against several different competitors:

Perhaps the most interesting is the concept of a competitor for Square Cash — the report indicates that Google is revamping Google Wallet and re-introducing it as a “peer-to-peer payments app” that lets users pass money back and forth to each other through their bank accounts. The new Google Wallet is reportedly coming to iOS and not just Android,  in keeping with Google’s focus on having as many of its services on iOS as possible. It also reinforced the idea that Android Pay would let businesses accept payments within their apps using stored credit cards and also noted that it could integrate with rewards programs that different retailers offer.

All in all, it sounds like a new day for Google’s efforts in mobile payments, something the company has struggled with since launching Google Wallet back in 2011. That stands in sharp contrast to Apple Pay, which launched last fall on the iPhone 6 and 6 Plus — most reports have shown that Apple Pay is dominant in the contactless payment space. We should find out exactly what in this new report is accurate before very long — Google’s big I/O keynote is less than a day away, and we figure to hear plenty about Android Pay then.

Quartz said in a story by Alice Truong that having a payments system is a critical way to gather data on consumers:

“It’s a very, very important form of data,” says Forrester analyst Michael Facemire. “Not only do they want customers using it, they want to make it incredibly easy for developers to add to their apps as well.”

It’s still unclear if Android Pay will replace or supplement Google Wallet, which in February got the blessing of Verizon, AT&T, and T-Mobile—the very wireless carries that blocked the app from their phones—while acquiring intellectual property from the carriers’ joint mobile wallet venture Softcard.

Google is trying to quickly become competitive in the payments space, but it will be a challenge to gain customers, particularly being second to the market. Android Pay will need to bring some innovation to the market in order to compete and get people to adopt it.