I just tried Android Pay at the same location twice today. One with Smart Lock on and a trusted device the second I removed the trusted device.
In the case with the trusted device I went to the cashier tapped the terminal and then had to enter my pattern, it then requested my pattern once more which I entered again then had to tap the terminal and it asked for the pattern yet again. On the third entry the process was complete and the transaction processed. Painful and definitely not efficient.
The second attempt I removed the trusted device entered my phone unlock pattern opened Android Pay went up to the terminal tapped it and the transaction processed immediately, no further patterns required or taps. It looks like Smart Lock does not work with Android Pay at this point. Sad, but true and I just purchased a new Moto KeyLink so I could use Smart Lock when Android Pay came out. Boy do I feel dumb.
Lesson learned wait till the product is out and try it first then proceed from there.