The first time I used my phone in the local shop, with half a dozen people behind me in the queue, the terminal read my phone fine, but the internet dropped so the terminal faffed on for a few minutes trying to to connect before voiding the transaction. The amount of tutting and sighing at me "trying to be fancy" was rather embarrassing, and frustrating because I wanted to plead my innocence and blame Virgin Media for their flaky internet rather than the phone technology.
Well that's worrying, I read that it should work without a signal, though I couldn't find much info on the subject. I came across this fairly old article.
http://www.cnet.com/how-to/android-pay-phone-how-it-works/
"You can use it in dead zones.
Android Pay can only perform a limited number of transactions in dead zones.
To understand why, let's back up and talk about Host Card Emulation, or "HCE." Whenever you make a purchase, a "token" is created, which replaces your real credit card number with a 16-digit dummy number. That way, if there was ever a credit card data breach and your transaction information was exposed, your real account number would be protected.
With Apple Pay, tokens are generated in a chip called the Secure Element. With Android Pay, they're generated in the cloud, which is what Host Card Emulation is. If you're without Internet and need to use Android Pay, the app will tap into a limited number of stored tokens on the device. (Where and how those tokens are stored isn't clear.)"