Android Pay, How does it work?

You'll still need your wallet, it doesn't work everywhere.

You need to have a PIN on your phone in order to use Android Pay. I think being rooted is still a no-go too (not sure).

So. Unlock your phone with your PIN, tap the terminal. Done. It fires the app automatically, it's really just unlock and tap.

If you have a trusted device keeping your phone unlocked that can be trouble, I just disconnect my watch before paying.

 

Pretty sure that right now Android Pay will fail to work if your /system partition has been modified in any way. Legacy system-based root would indeed modify your /system partition.

Some devices can support a (new) system-less root which may (for the time being) allow Android Pay to work, but I'm betting long term there will be root-/su-specific checks that will be done that will prevent Pay from being allowed.