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Google introduces Android Pay, a replacement for its wallet app on mobile

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Can a new look help to reclaim the momentum from Apple?

Another year, another attempt by Google to get mobile payments right. Today, at its I/O developer conference, the company unveiled a new app, called Android Pay, that will take the place of Google Wallet on your phone.

Android Pay will power in-app and tap-to-pay purchases on mobile devices. Google Wallet will stick around, but it will power Play Store purchases outside Android, say on the web, and facilitate peer-to-peer payments you can make through the app and on services like Gmail. Confused? Let the new branding wash over you, and stop worrying so much.

The history of Google’s work on mobile payments has always embodied this frustrating mix of promising ambition and confusingly fraught execution. Android smartphones had near field communication (NFC) and card emulation years before the competition. But relationships with the carriers and manufacturers that distribute Android devices kept Google Wallet from realizing its full potential. Google also had a tough time getting major banks and credit cards to participate. That allowed Apple to swoop in late and capture a great deal of momentum in the market, with CEO Tim Cook claiming that it is now larger than all its major competitors combined.

Google is hopeful that this will change now that Softcard is dead. The carrier-backed payment effort folded earlier this year, with Google purchasing some of its technology. At the time, Softcard advised all its users to download Google Wallet as a replacement. Those carriers will now simply preinstall Android Pay instead. It remains to be seen if swapping the word "wallet" for "pay" will give Android users the awareness and confidence they need to actually start shopping with their phones in the wild. Google is planning to make merchant's reward programs work with Android Pay, a move it hopes will boost engagement. And it has gotten the major financial players to play ball this time.

Google says seven out of ten Android devices are ready for Pay and that 700,000 merchants can accept it in their stores today. Spring, a mobile shopping app that has been beta testing Android Pay, has seen a measurable improvement in business with the "buy button" powered by Android Pay. "The payments are still secure but you can get creative with the design," says CEO Alan Tisch.

Spring orders purchased with Android Pay are on average two times larger than regular credit card orders, says Tisch, and customers who placed their first order with Google's payment system are 27% more likely to place another.

On phones with fingerprint recognition, users can simply touch to unlock Android Pay. One of the most well known devices with this capability is the Samsung Galaxy S6 and Galaxy Note 4. This bring us to what will likely be a tension between Google, the company, and Android, the open-source operating system. Samsung, the largest maker of Android devices, is building its own version of payments. What happens when I buy the latest Samsung Galaxy from one of the old Softcard carriers? Chances are the Android Pay app might not get top billing, even if it becomes the platform of choice for developers, powering in-app purchases and tap-to-pay in the background.