UPDATED 07:15 EDT / FEBRUARY 26 2015

Google tipped to launch Android Pay, intensifies effort to compete with Apple Pay

androidGoogle Inc. is apparently preparing to introduce a new payments API, dubbed Android Pay, to power in-store and in-app payments for third-party Android apps.

Anonymous sources familiar with Google’s plans told Ars Technica that the search giant intends to launch Android Pay at its upcoming I/O conference in May.

Android Pay will enable developers of third-party apps to add mobile payment functionality to their apps. Users can then simply add their credit or debit card details and pay for goods with a single-tap within the app. Retailers making use of the Android Pay API in their apps will also be able to allow tap-to-pay transaction in-store.

According to Ars Technica’s source, Android Pay makes use of Google’s Host Card Emulation (HCE), a piece of technology that enables third-party apps to access and use the Near Field Communications (NFC) chips installed in handsets running Android.

Unlike Google Wallet, said the source, the Android Pay API is “built from the ground up” using HCE for Android developers.

Android Pay, for which Google is yet to sign up any partners, is not a replacement for Google Wallet but will rather support Google’s existing mobile payments service. That support comes in the form of allowing Google Wallet users to link their account to third-party apps that run Android Pay.

The report notes that it is unclear at this point if existing Google Wallet APIs will be discontinued once Android Pay becomes available. Google Wallet offers an “Instant Buy API”, which already lets Android developers add a “Buy with Google” button in third-party apps.

Android Pay may be a further attempt by Google to take on rival Apple Inc.’s Apple Pay. On Monday, Google announced that it has acquired “technology and intellectual property” from rival Softcard, a mobile payments company funded by Verizon, AT&T, and T-Mobile.

Following Apple Pay’s initial success and an overall increase in mobile payment transactions, other players in the space are also gearing up to compete with the iPhone maker. Last week Samsung Electronics Co. announced that it had acquired LoopPay, a device that uses magnetic Secure Technology (MST) to emulate magnetic stripe cards.

photo credit: Android Lineup – Beige via photopin (license)

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