Mobile payments and mobile wallet technology aren’t new – they’ve been making tech headlines since 2011. Now, however, after various fits and starts (remember Softcard and Square Wallet?), the giants Apple, Google and Samsung are duking it out. Apple Pay had a head start and has made significant strides in mainstream consumer awareness, issuer participation (more than 50 card issuers are compatible with Apple Pay) and merchant enthusiasm (Panera, Sephora, Walgreens and more back the app via signage and stickers at checkout). Even Rite Aid, which blocked the technology behind Apple Pay (NFC – the same technology behind Android Pay) is now on board. Meanwhile, CurrentC (the QR-based mobile payments technology Rite Aid and a confluence of other retail giants backed) is nowhere to be seen.
It will be interesting to see if Android Pay can take advantage of these developments — and whether it will help lift mobile payments to mass acceptance.
In the meantime, here’s what we know about Android Pay.
Wait… what happened to Google Wallet?
Google Wallet was one of the first mobile payment solutions to enter the market. It’s still available, and it appears Google isn’t going to jettison it. Instead, Google Wallet will live on as a vehicle for P2P payments while Android Pay will advance as Google’s mobile payments platform.
It’s no surprise Google wants a do-over. When it launched Google Wallet more than four years ago, mobile payments were unfamiliar. In fact, major wireless carriers blocked Google Wallet when it came out (in favor of backing Softcard, which has since been acquired by Google). Today, with bank, card network and carrier support, it’s a different playing field.
How does it work?
You’ll enter information for compatible payment cards into the app. Via a process called tokenization, the issuer will send back a code (NOT your account number) that will represent the card in your phone and be transmitted during payments. If data thieves manage to steal this information in a breach, they won’t get your account number.
When you’re at the checkout counter, unlock your phone, wave it over a terminal that’s enabled with near field communication (NFC) technology, select a card, and you’re done. The card will be charged just as if you’d used the physical card to pay.
If you’re shopping at a retailer that has integrated its loyalty programs into Android Pay – and have added your corresponding loyalty card to Android Pay – you’ll automatically be credited for the purchase. Depending on the program, you’ll also be able to pay for your purchase with loyalty points from within the app. Apple Pay hasn’t yet integrated retailer loyalty programs — but has announced plans to do so starting this fall.
Where can I use it?
You can use Google Wallet anywhere NFC is accepted. Look for the symbol pictured to the right. Even if you see no Android payment decals displayed, the app will work as long as the payment terminal is NFC-compatible.
Which cards can I use with Android Pay?
Debit and credit cards from MasterCard, Visa, American Express and Discover are compatible, according to Android Pay’s website. However, the bank that issued the card needs to sign on as well. Right now, the list of compatible issuers includes: Bank of America, Navy Federal Credit Union, PNC, Regions, USAA and U.S. Bank.
Which phones can I use it on?
Android Pay can be used on any Android phone equipped with NFC running KitKat (Android’s operating system) version 4.4 or above. That makes it less limited than Apple Pay, because Apple didn’t integrate NFC technology until the iPhone 6 and 6 Plus.
Will Android Pay be a success?
Apple Pay has a head start, but Android Pay’s edge comes with its integration with loyalty programs. At this point, we don’t know which brands and retailers’ programs will be fully integrated at launch, however, and Apple could catch up quickly.
A bigger threat may be Samsung Pay, which uses technology that works with older terminals that haven’t been upgraded for NFC. Samsung’s newest phones will all come preloaded with it.
Just as there’s room for a variety of smartphones to exist, however, there’s probably room for a number of mobile payment solutions – which will each try to gain the upper hand with new features as time goes on. That’s assuming, however, that consumers take to mobile payments. Right now, the first competitor all these apps have to unseat is the old-fashioned wallet.
Updated Sept. 15, 2015