Another year brings another attempt by Google to develop the winning formula that will allow it to compete long-term in the mobile payments war.
Its Google Wallet product, which was launched in September 2011, had too many caveats for adoption and turned off merchants who feared what Google might do with the purchase data it collected. Over time the strategy for the Google Wallet evolved and it looks like from now on it will be used for powering Play Store purchases and peer-to-peer payments.
As the Google Wallet fades away into payments folklore, Android Pay arrives on the scene and in many ways it has the look and feel of its aspiring rivals, Apple Pay and Samsung Pay.
It will leverage NFC technology and enable merchants to accept mobile payments in store from participating consumers, as well as enable merchants to embed Android Pay directly into their mobile apps. It also will support fingerprint readers for users to authenticate payments at checkout in the same vein as Apple Pay.
What makes this proposition from Google more attractive than even Apple Pay, which has gained a lot of attention in recent months for its mobile payments product, is that many of the phones running on the Android system have come equipped with NFC chips since 2012 or so.
This equates to seven of 10 Android users being able to use Android Pay from launch, which is a far greater installed base than what Apple has today.
What remains to be seen is how merchants will react to this announcement. Google has brought more merchants to the table than it did at the launch of Google Wallet, but clearly missing from this roster of merchants are those 50 American retail brands that banded together to launch its own platform called CurrentC.
Another big unknown is how Android Pay and soon-to-be launched Samsung Pay will compete for the overlap within their respective user bases. Undoubtedly, these two dueling wallets will lead to mobile wallet confusion in the Android ecosystem.
Michelle Evans is a consumer finance senior analyst for Euromonitor Internationa.l