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By Julianne Pepitone

Google fans scoffed when Apple unveiled its mobile payment service Apple Pay to great fanfare last fall, pointing out that Google Wallet has offered similar technology since 2011. But Google Wallet never really took off -- and now Google is largely replacing that service with the new "Android Pay."

Google unveiled the new service Thursday morning at its annual I/O developers' conference in San Francisco. Like Apple Pay -- and Google Wallet -- Android Pay works by using a near-field communication, or NFC, chip. Link a major credit card to Android Pay, wave the phone near a merchant's special NFC reader at a store checkout and confirm the purchase.

Related: Beyond the Wallet: Apple Pay 'Cements the Future' of Mobile Payments

Retailers who accept Android Pay (a group that includes Macy's, Subway, Walgreens and other big brands at Thursday''s launch) can also let customers use the service to buy goods within their apps, rather than require them to enter a credit card number or use a third-party service like PayPal.

The splash around Apple Pay has renewed companies' interest in mobile payments and introduced the average consumer to the idea. But after it was launched back in 2011, Google Wallet never managed to gain mainstream traction -- in part because major wireless carriers created their own now-defunct mobile payment system called Softcard.

This time around, Google has worked to secure support for Android Pay. AT&T, T-Mobile and Verizon will include the app pre-installed on Android phones sold in the United States. (Google had announced this initiative in February under the Google Wallet name.)

To keep things confusing, the Google Wallet brand will live on for certain Android-based exchanges of money including peer-to-peer payments.

How Does Apple Pay Work?

Sep. 11, 201400:42