According to Ars Technica, a source close to the matter revealed Wednesday that Android Pay doesn't mean the end of 'Google Wallet,' it will continue to exist as a separate entity, and in fact it will be supported by Android Pay.
The unnamed source reportedly said that Android Pay is "built from the ground up" for Android developers using Host Card Emulation (HCE), and it will power in-store and in-app payments directly. Android Pay will reportedly allow firms to add mobile payments features to their apps. Users can associate their credit card or debit card information, allowing for "single-tap transactions within the app."
Additionally, the companies/ merchants/ developers are said to be allowed to offer tap-to-pay transactions in brick-and-mortar stores if they opt for Android Pay API, which will rely on Google's HCE and Near Field Communications (NFC) chips in smart devices to make the payments.
(Also see: Google Partners Softcard, Carriers to Pre-Install Wallet Service on Android Phones)
At present, Google's "Instant Buy API" for Wallet allows Android developers to integrate a "Buy with Google" button in their app, but it is unclear whether existing Google Wallet APIs will remain after Android Pay or not, adds the report. Google Wallet lets users utilise their cards to buy a prepaid "virtual card" with which payment is done to merchant, and this entails small fees per transaction for Google, something it would be looking to do away with.
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