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(Pocket-lint) - Google is expected to launch a new payment method called Android Pay at the Google I/O conference in May.

According to the source of Ars Technica, Android Pay will compliment Google Wallet rather than replace the digital payment system.

The exciting part about Android Pay is that it will, reportedly, allow third parties to add it to their apps. Primarily this will mean one-tap payments within apps. But this also includes shops in the real world, suggesting NFC enabled smartphones and smartwatches could be used for contactless payments.

Google Wallet also has its Instant Buy API which allows app devs to put a "Buy with Google" button in their app. Whether Android Pay will replace this is not clear.

If Android Pay works the same as Google Wallet it will allow users to associate their credit or debit card with the account. When paying digitally the money is simply taken from that account and paid to the merchant via Google. A bit like PayPal really.

Apple Pay, which launched in October, has proven popular in the US and already accounts for more of the market than Google Wallet which has been around since 2011.

Google I/O will take place from 28 May when Android Pay is expected to be announced.

READ: Apple Pay: How to set it up and which stores and cards support it right now

Writing by Luke Edwards.