Today, Sundar Pichai, Google's Senior Vice President of Product, announced that Google is working on an "Android Pay" API for the Android operating system that should standardize how mobile payments work on Android and also make it easier for merchants to be compatible with all Android Pay services.
So far Google hasn't had tremendous success with Google Wallet, despite the service being available on the market for a few years already. In part, this is because Google focused only on the U.S. market, instead of trying to expand globally, where the carriers became hostile to the Google Wallet app because they were getting ready to launch their Isis (now Softcard) mobile payments system.
Because mobile payments could be a billion-dollar business for any serious company entering this market, Google Wallet also faced competition from Google's own partners -- Android OEMs such as Samsung, who are building their own mobile payments services.
Samsung recently acquired LoopPay, which is already compatible with the vast majority of merchant stores, but it remains to be seen if this will be a long-lasting thing, as both consumers and the U.S. law are pushing towards standardization around the EMV chip and PIN standard.
To solve the low adoption and mobile payments fragmentation issue, Google's solution seems to be a standardized Android API called Android Pay that would work on all future Android devices.
This is great news for users and merchants alike, because they only have to use or support Android Pay. At the same time, it should allow any mobile payments service to integrate with it so users can choose from a variety of services.
The Android Pay API should also bring standardized security for keeping smartphone owners' credit card data safe. Otherwise, different mobile payment providers may have used less secure protocols to protect the data.
Right now there isn't too much information on this, except that the credit card numbers will be tokenized just like with Apple Pay, which is a great privacy and security feature that even Google Wallet didn't have. Google's Pinchai said that Google Wallet will integrate with Android Pay, but it's not clear whether this means the app will use tokens like Apple Pay as well.
Apple's new iPhones, as well as most Qualcomm chips that also support Sense ID and the SecureMSM, will use secure hardware zones to protect the credit card data as well. It's not clear, though, whether Google will actually require all phone makers to use chips that support a "Secure Enclave"-like zone for both fingerprint and credit card data. If Google doesn't require it, some phones may be less secure with this data.
Sundar Pichai didn't say when the Android Pay API will arrive, but it's likely to appear in a future Android M/6.0 version, probably at the end of the year. Google may offer more information about it at Google I/O this spring.
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