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Google is desperately trying to compete with Apple Pay

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Google Wallet entered the mobile payments market as pretty much the only player in the game back in 2011 but, despite this massive head start, the service is now playing catchup to the four month-old Apple Pay. This is due in large part to Softcard, a joint mobile payments venture that was formed by AT&T, T-Mobile, and Verizon out of fear that Google would dominate the field. This, combined with the fact that the three wireless carriers also blocked Google Wallet on their devices helped effectively kill Google Wallet in the womb.

By the time 2013 came along, only 8% of consumers in the United States had ever used Google Wallet while only 41% had ever heard of the service. To be fair, there were plenty of factors aside from Softcard and the Google Wallet ban that contributed to its lackluster success, such as lack of support from major retailers.

For those of you who aren’t familiar with Google Wallet, Megan Geuss gives us a brief but detailed description of the service in an article for Ars Technica:

“Google Wallet currently lets users upload any credit or debit card they have and essentially uses that card to buy those users a prepaid “virtual card” with which Google pays merchants when a user makes a payment. This is done for liability and business reasons, and reports suggest that it costs Google a small fee every time a user makes a purchase through its app. Still, Google considers a mobile payment platform valuable because it can gather user information, which it can use to deliver ads more effectively.”

With the ridiculous success of Apple Pay, however, Google and the coalition of wireless carriers have been forced to join forces to compete with Apple’s owns service. The former enemies have now reached an agreement that grants Google access to some of Softcard’s intellectual property and technology and will have Google Wallet pre-loaded on the smartphones released by the carriers. Softcard has announced that it will be shutting down its Android and Windows Phone apps very soon and, while it recommended that users switch over to Google Wallet, it admitted that there’s no way to easily bring over your information from one app to the other.

According to a recent report, Google isn’t stopping there and will be announcing a brand new payments API at the Google I/O conference in May. Known as Android Pay, this API will differ from Google Wallet in that it will be “built from the ground up” for Android developers using Google’s Host Card Emulation (HCE), which enables third-party apps to utilize Near Field Communications (NFC) chips in Android smartphones. It won’t be replacing Google Wallet either, which will continue to exist as a separate entity.

Android Pay will allows companies to add mobile payments options to their apps without having to create their own service. It will also allow users to upload their credit card or debit card information so that will turn purchases into single-tap transactions within the app. Perhaps the most interesting feature, however, is that companies adopting the API will be able to enable tap-to-pay transactions in brick-and-mortar stores, although Google still doesn’t have any partner companies at the moment.


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