Report: Google's Android Pay enhancement expected to be key part of I/O announcements

Google (NASDAQ: GOOG) will use its I/O developer conference, which kicks off today, to unveil an overhaul to its mobile payments offering, according to a New York Times report. Further, the report said Apple (NASDAQ: AAPL) is going to soon announce enhancements to its own Apple Pay platform, including a rewards program.

Google's Sundar Pichai confirmed in March that the search giant would launch a new service called Android Pay. According to the Times, which cited unnamed sources, Android Pay will let merchants accept credit card payments from inside mobile applications and can be integrated with loyalty programs at retailers. Further, the report said that Google Wallet, Google's existing mobile commerce app, will also be reintroduced as a peer-to-peer payments app that consumers can use to send money to each other directly from their debit accounts, similar to PayPal, Venmo and others.

Google and Apple declined to comment on their mobile payment plans, according to the NYT

Pichai, Google's senior vice president of products, said during Mobile World Congress that Android Pay will do things such as tokenize credit card details for security and ensure that authentication works. He said Google Wallet will be "a customer" of Android Pay but that it could support platforms like Samsung Pay or mobile payments services in China. Pichai added that it will support Near Field Communications technology but that NFC could eventually be replaced by other payment methods, including biometrics. Android Pay will also likely include technology Google acquired in February from Softcard, the mobile payments joint venture that had been backed by Verizon Wireless (NYSE: VZ), AT&T Mobility (NYSE:T) and T-Mobile US (NYSE:TMUS). 

For Google, enhancing its mobile commerce capabilities took on added urgency after Apple added Apple Pay services last fall to its latest iPhones, and now to the Apple Watch. Google is looking to get more consumers using its services--and likely will use that information to enhance its advertising products. For Apple, mobile payments enhance the capabilities of its devices, from which it derives high margins. 

Google and Apple "want to be as disruptive to payments as Amazon has been to retail," Forrester Research analyst Sucharita Mulpuru told the NYT. "By being early they can shape the customer experience and expectations." Forrester predicts mobile payments will swell to $142 billion by 2019 in the United States, almost tripling from $52 billion in 2014.

Android Pay is just one element of what is expected to be a wide range of announcements from Google at its I/O conference. Google is expected to announce the latest version of Android, Android M. And, according to Bloomberg, the operating system could get updates around security, including fingerprint scanning technology.

Google may also give an update on Android Auto and add new features. This week General Motors and Hyundai said they expect to sell vehicles equipped with Android Auto later this year.

Google might also announce enhancements to its software and services for the Internet of Things, an operating system codenamed "Brillo."

Apple is kicking off its own developer conference on June 8, and, according to a 9to5 Mac report, the company has some tricks up its own sleeve. The report said Apple will soon launch a new iOS enhancement called "Proactive," which will leverage Siri, iPhone contacts, calendars, Apple's Passbook app and third-party apps to create a competitor to Google Now. According to the report, which cited unnamed sources, Proactive will automatically provide timely information based on a person's persona; data and device usage patterns, but will respect the user's privacy preferences.

For more:
- see this NYT article
- see this Bloomberg article
- see this Re/code article
- see this 9to5 Mac article

Related Articles:
Google I/O 2015 Special: Material Design, one year later
Google Android M rumored to add fingerprint authentication
Google likely to use I/O conference to debut Android M, enterprise and cloud messaging updates
Report: Google to launch Android Pay API at I/O to spur mobile payments adoption

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