Google will launch a new API at its I/O developer conference in May with the goal of making it easier for consumers to pay for goods within apps and in retail stores.
The Android Pay API will be separate from Google's Wallet product, according to a report in Ars Technica. It will allow third-party app writers to drop mobile payment capabilities into their apps. Users will be able to load credit or debit cards and make payments within those apps using Google's back end. Further, the API will support NFC-based tap-to-pay transactions at real-world stores and retailers.
Ars says the crux of mobile payments "will rely on Google’s Host Card Emulation (HCE), which makes it easier for third-party apps to take advantage of Android phones’ near field communications (NFC) chips." The Android Pay API will be built from scratch with HCE as its base. This is essential for security, as HCE protects users' credit card information.
Google Wallet will continue to exist as a stand-alone entity. The Android Pay API will be compatible with it, though to what extent is unknown. At a minimum, users will be able to link their Google Wallet accounts with any third-party apps that support the Android Pay API. Google already offers a similar API called Instant Buy. It requires a Google Wallet account, however. It's unclear if the Instant Buy API will be phased out after the arrival of the newer Android Pay API.
The mobile payment space has heated up dramatically since Apple launched Apple Pay in October. Despite the head start enjoyed by Google Wallet and Softcard (operated by AT&T, T-Mobile and Verizon Wireless), Apple Pay has been a smashing success. Apple's success appears to have reinvigorated the competition.
Earlier this month, for example, Samsung acquired a startup called LoopPay. LoopPay doesn't rely on NFC for mobile payments and is compatible with a much wider range of in-store payment terminals. Samsung is expected to debut a "Samsung Pay" product later this year.
More importantly, just this week Google wrested control of Softcard from AT&T, T-Mobile and Verizon. Softcard, which started life as Isis (named changed for obvious reasons), launched in November 2013 with little traction. Like Apple Pay and Google Wallet, it relies on NFC chips in smartphones and compatible payment terminals at the point of sale. Google purchased select Softcard assets from the carriers, which have agreed to place Google Wallet more prominently on their Android handsets. Until now, the carriers have favored Softcard over Google Wallet.
With new assets at its disposal, Google plans to significantly bulk up Google Wallet. What's not clear is what role Softcard's technology will play in the Android Pay API.
Google did not comment on Ars' story, so developers will have to wait until May to see what comes of this new in-app payment API.