One of the big announcements expected to come out of Google's I/O 2015 developers' conference, which kicks off Thursday, is the revival of Google Wallet, along with the launch of Android Pay, the search giant's answer to the Apple Pay mobile payments system launched last year.
Android Pay will reportedly support both online payments and in-store purchases, while Google Wallet is focused on peer-to-peer money transfers. Google first revealed its plans for Android Pay at the Mobile World Congress in Barcelona earlier this year. Rolled out in 2011, Google Wallet enables tap-and-pay transactions using near-field communication (NFC).
Apple launched its mobile payment system, which also uses NFC, with a big splash last fall. Available on the iPhone 6, iPad Air 2, iPad mini 3 and Apple Watch, Apple Pay also allows in-app purchases through applications like Airbnb, Groupon, Ticketmaster and Uber.
A 'Potential Game-Changer'
We reached out to Greg Weed, Director of Card Performance Research at the analyst firm Phoenix Marketing International, to get his thoughts on Google's plans. He told us that although Google has languished for a while in the mobile payments department, its re-entry into the market with Android Pay could change the picture dramatically. The market is likely to be even more shaken up with the coming debut of Samsung Pay, set to become available on the Samsung Galaxy 6 by the end of June, he told us.
"It's a potential game-changer," Weed said of Samsung's payment system that will enable transactions via magnetic strip technology rather than by NFC. That could make it more appealing to a broader range of merchants as it doesn't require them to invest in new point-of-sale systems, he said.
Google's Android Pay is expected to enable payments in the same way, Weed said. Because more people still use Android phones rather than iPhones, those two new payment options -- Google's and Samsung's -- could change the mobile phone payment landscape considerably, Weed said.
Real Test Yet to Come
Citing "three people familiar with the situation," a report Thursday in the New York Times said that Google would be revealing its new mobile payment plans at its developers conference in San Francisco. Android Pay "will let merchants accept credit card payments from inside their mobile apps and can be integrated with loyalty programs at retailers," according to the article.
The real test for both Android Pay and Samsung Pay will come after Google and Samsung make their announcements and reveal more about what their marketing strategies for those systems are, Weed said.
While Apple Pay's capabilities remain somewhat limited, the company has succeeded in making a big impact on the payments market because "they put a lot of money behind it," Weed said. With Google, the question is, what will they do aggressively to promote it? People need to have some sense of what the offering is," he added.
Another challenge will be proving to users that the new payments systems are in fact preferable to taking out and swiping a credit card, Weed said. "Is it just another way to pay?" he asked. "Is it better, is it faster? . . . They all have a ways to go in terms of moving further into the market."