In the shadow of Apple's latest round of product announcements last week, Google (NASDAQ:GOOG) released Android Pay on Thursday, Sept. 10 under the media radar. And this time the news is definite.
The announcement seemed imminent after a number of false alarms. First, it was said to come out with a new LG device and the release of the new Android operating system Marshmallow this fall. Then some McDonald's restaurants posted a notice saying Android Pay would go live on Aug. 26. Most recently, Verizon was sourced as a rumor that the date would be Sept. 16.
Most of these had one thing in common: they beat Samsung Pay's U.S. release date of Sept. 28. While Apple Pay has a distinct customer base among users of devices running iOS, Samung Pay and Android Pay are expected to directly compete for Android users, especially those with the latest Samsung mobile devices.
But last Thursday, this appeared on the Android Official Blog: "Today, we're beginning to roll out Android Pay—the simple and secure way to pay with your Android phone at over one million locations across the U.S." The post was written by Pali Bhat, director of product management for Android Pay.
"Android Pay also stores your gift cards, loyalty cards and special offers right on your phone. We'll be rolling out gradually over the next few days, and this is just the beginning. We will continue to add even more features, banks and store locations in the coming months, making it even easier to pay with your Android phone," Bhat wrote.
Of the major mobile payment apps, Android Pay has the most backwards compatibility. It will work with all NFC-enabled Android devices running KitKat 4.4 and up, on any mobile carrier. KitKat 4.4 was first announced on Sept. 3, 2013, then was updated by Lollipop on Nov. 3, 2014. The next Android operating system, Marshmallow, is expected this fall. The Android Pay app will be preinstalled on Android devices with the upcoming Marshmallow operating system.
Therefore, it is safe to assume that a very large number of Android devices will be able to run Android Pay. Ed McLaughlin, chief emerging payments officer at MasterCard, estimated that 1,000 different handsets would be compatible.
In contrast, Apple Pay and Samsung Pay will only work on those manufacturers' latest devices. While Samsung Pay will support magstripe transactions and will work without near field communication on the majority of point-of-sale terminals, there is a question as to whether Verizon will support it.
Android Pay will support credit and debit cards from the four major payment networks: American Express, Discover, MasterCard and Visa, Bhat said. "These cards are issued by many of the most popular U.S. banks and credit unions, including American Express, Bank of America, Discover, Navy Federal Credit Union, PNC, Regions Bank, USAA and U.S. Bank. Citi and Wells Fargo will be available in the next few days, Capital One is coming soon, and we're adding new banks all the time."
As of earlier this week, the Android Pay app was not offered in the Google Play store. Bhat said "in the next few days" Google Wallet users will be able to update the app to Android Pay, and the Android Pay app will be available for new users to download. In-app functionality isn't live yet. "Later this year, you'll also be able to use Android Pay to speed through mobile checkout in your favorite apps. And with select merchants, you'll soon be able to transmit your loyalty cards and special offers with just a tap," he wrote.
For security, Android is supported by industry standard tokenization, meaning that a user's account number is not sent with the payment. Instead, a virtual account number is used, providing a layer of security. A purchase confirmation will be sent as soon as an Android Pay transaction is completed so users will be able to watch for suspicious activity.
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