Android Pay Vs. Apple Pay: How Google's Latest Payments System Stacks Up

Google is taking another whack at mobile payments. This time with a new system dubbed Android Pay, which will enable Android smartphone users to make tap-to-pay purchases at physical retail stores or purchase things in apps.

The service functions similarly to Apple Pay, the mobile payment system developed by Apple Inc. All Android users need to do is unlock their smartphone and place it in front of a contactless reader in a retail store to make a purchase. Android Pay also shields user credit card data by creating a virtual credit card number to be used for in-store transactions.

And Google is working with financial institutions such as American Express, Visa, Discover and MasterCard to roll out the service. Users will also be able to activate Android Pay once their banks begin supporting it in their apps. But unlike Apple Pay, Google is also working with wireless companies such as AT&T, T-Mobile and Verizon so customers can transfer their Android Pay credentials when purchasing a new phone.

Over 700,000 retailers in the U.S. that accept contactless payments will also accept Android Pay. The service will also be available for in-app purchases from Uber, Lyft , Hotel Tonight and other vendors. Owners of Android phones with fingerprint readers will also be able to authorize purchases, similar to Apple Pay.

Google’s Android Pay is its second attempt at spurring adoption of mobile payments on Android. The company had previously tried to do the same with Google Wallet four years earlier. But it failed to attract many partners and for years carriers blocked the contactless payment app from working on Android phones sold for their networks, while they supported the now defunct Softcard (formerly known as ISIS).