By Alistair Barr
Google Inc. revised its mobile-payment service Thursday with new
partners including wireless providers, payment networks, retailers
and banks, stepping up competition with Apple Inc. 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 McDonalds, 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.
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 alistair.barr@wsj.com
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