Google Inc. is betting its latest mobile payments incarnation—Android Pay—will work better than Google Wallet did. Announced Thursday at Google I/O, its developer conference, Android Pay is poised to compete directly against Apple Inc.’s Apple Pay, PayPal Inc., and the upcoming Samsung Pay for a piece of the burgeoning mobile-payments market.

Android Pay, which Google says will be available in coming months, will work with smart phones using KitKat and Lollipop versions of the Android operating system. Nearly all of these phones also have near-field communication (NFC) technology. Together, those two OS versions account for 49.5% of Android phones. That’s about 26% of all U.S. smart-phone subscribers, according to Digital Transactions News estimates. By contrast, the iPhone 6 and 6 plus, which work with Apple Pay for in-store transactions, account for about 8% of U.S. subscribers, DT estimates.

Google’s strategy, which is a close replica of that of Apple with Apple Pay, makes the most sense from a business and technology standpoint, says Rick Oglesby, head of research at Double Diamond Group, a Centennial, Colo.-based advisory form.

“If the major wallet players approach banks and merchants with compatible offerings, they strengthen the business cases for participation and acceptance,” Oglesby tells Digital Transactions News in an email. “Apple put the model in place to gain issuer and network participation, so Google is following that model as well. Then, Apple and Google will actually be teaming up to gain merchant participation.”

Digital Transactions, May 28, 2015
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