Google I/O 2015: How Google and Apple are battling for your digital wallet

Apple Pay has helped raise consumer awareness of mobile payments, but Google can't rely on that if it launches Android Pay as expected.

After repeatedly hearing since 2012 that "this will be the year for mobile payments" it looks like 2015 really is it. That's because Apple and Google are both pushing solutions to make it easier and better to use a mobile device at the point of sale.

And both are going head to head to win people over.

You could argue that Google made the first move with its Google Wallet product back in late 2011. It was a well-intentioned but poorly implemented first effort, however. Wallet originally worked on a single handset with embedded Near Field Communications (NFC) chip and only then with a single carrier partner in Sprint.

Wallet never gained much traction outside of early adopters like myself -- I first used my phone to pay for gas in December 2011 -- even though Google's hardware partners expanded availability to other phones. The other three U.S. carriers had their own mobile payment system, SoftCard, which Google bought and shuttered earlier this year.

It simply took Google too long to get Wallet moving forward in light of carrier competition and phones that didn't have NFC chips. Now it appears Google is ready to revamp Wallet, or rather, advance it with Android Pay, reports the New York Times.

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As a second attempt to provide digital payments, Android Pay is likely to be a service included with all Android phones. That's different from Wallet, which was for a long time available as a downloadable app in the Google Play Store.

I anticipate at the Google I/O event later today that Google will simply include Android Pay as a part of Android; possibly through a Google Play Services update on older phones. It's also likely to include better support for merchant rewards cards.

Apple, of course, isn't sleeping at the wheel. Instead, it wisely waited to see how it can improve upon existing mobile payments and created Apple Pay, which quickly became accepted at more than 700,000 locations.

It too uses NFC, which is found in the latest iPhones as well as the Apple Watch.

Apple has made a big deal of the tokenization approach Apple Pay uses: Neither the merchant at the point of sale, nor Apple, have actual credit card numbers when paying. Sources tell the NYT that Apple Pay will also have reward card support; something Apple is expected to announce on June 8 at its WorldWide Developer Conference keynote.

With its marketing, Apple has raised consumer awareness for digital payments as a whole.

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That directly helps Google because its Wallet app isn't well known; either by consumers or merchants. I've used Wallet for dozens of contactless payments and the typical retail store employee often says "Oh, that's neat. I didn't know we could do that."

Google can't rely on it's main competitor, Apple, to succeed here, however.

Once the Google I/O keynote is over, Google needs to gather its hardware and carrier partners for the next big push: Marketing.

One of the several reasons Google Wallet hasn't met expectations or really taken off is because people simply don't know about it. The company has to make Android Pay a centerpiece of the the platform else run the risk of people thinking Apple Pay is the only digital wallet they need to carry.

Google's big keynote takes place later today at 10am PT. Let's see if Android Pay is star of the show. It needs to be.

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