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Apple, Google said to refine their mobile wallet offerings

Watch for a revamp of Google Pay as a peer-to-peer payments system, as Apple tinkers with its rewards program, says the New York Times.

Google Wallet is expected to be revamped as a peer-to-peer payments system. Marguerite Reardon/CNET

Apple and Google are getting ready to up their ante in the mobile wallet market, going head-to-head for dominance of a sector expected to explode in consumer popularity in coming years.

Google will unveil an overhaul of its mobile-payments products Thursday during its annual I/O developer conference in San Francisco, according to the New York Times. The search giant is said to have revamped its Google Wallet as a peer-to-peer payments app that will allow users to send each other money through their bank accounts. The company is also expected to offer more details about Android Pay, the payment platform for retailers it unveiled in March.

Apple, meanwhile, is expected to unveil enhancements to Apple Pay next month at its Worldwide Developers Conference, including a rewards program for users of its mobile wallet, according to the Times.

Apple and Google did not immediately respond to requests for comment.

The moves highlight the intensifying competition for mobile payments, the ability to pay for goods and services with a smartphone. In addition to deeper entrenchment in the financial services industry, the efforts are seen as an avenue to attract more consumers to the tech giants' products and services.

Gaining consumer loyalty early may mark the difference in the mobile-payments market, which is expected to grow next year to $27.5 billion in US transactions from last year's $3.5 billion, according to market research firm eMarketer. The number of mobile payment users in the US is expected to hit 36.2 million next year, more than twice the number using digital wallets in 2014, the researcher said. That pace is expected to continue into 2018, when eMarketer foresees 57 million consumers using their smartphones to checkout at store registers.

While a handful of mobile-payments efforts have been around for the past couple of years, Apple jump-started interest last fall with the introduction of Apple Pay , which allows consumers to make credit card purchases with an iPhone 6 or iPhone 6 Plus . Less than 72 hours after its debut, 1 million credit cards had been used on the service.

Like Apple Pay, Android Pay will run on near-field communications, or NFC, a technology that uses an embedded chip to talk with compatible registers. But unlike Apple's services, Android Pay will not be a standalone app, serving instead as the platform for third-party store and payment apps.

In addition to competing against each other, the two companies also face stiff competition from other companies that offer similar mobile payments services. Samsung, for instance, offers its new Samsung Pay feature on the Galaxy S6 and Galaxy S6 Edge smartphones. PayPal, the digital payments unit being spun off from eBay later this year, plans to acquire Paydiant, a startup that helps companies such as Subway and Capitol One build mobile payments options.