Last updated: May 27, 2011 1:15 am

Google reveals mobile payment plan

Google and a group of partners including Sprint Nextel, Citibank and MasterCard plan to jump-start the mobile payments market in the US with a system based on a free ‘Google Wallet’ app and a technology called NFC (Near Field Communications.)

“Today, we’ve joined with leaders in the industry to build the next generation of mobile commerce,” said Stephanie Tilenius, Google’s vice-president for commerce and payments. “With Citi, MasterCard, First Data and Sprint we’re building an open commerce ecosystem that for the first time will make it possible for you to pay with an NFC wallet and redeem consumer promotions all in one tap, while shopping offline.”

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While the outlines of the Google NFC scheme had been widely expected, Google also revealed that Google Wallet will also come pre-configured with the internet advertising group’s daily-deal coupon service called ‘Google Offers.’ This service will compete directly with rivals including Groupon and LivingSocial and will provide Google with a new mobile revenue stream.

Google said it will not derive any revenue from financial transactions made using its secure mobile wallet system which will enable consumers with some Android-based handsets to ‘tap and pay’ for goods and services instead of swiping a traditional credit or debit card. Retailers, restaurants and other service providers will need new or modified NFC-enabled readers to accept payment.

Google Wallet will launch in New York and San Francisco this summer where many retailers including CVS, Jack in the Box, Sports Authority and Sunoco as well as Coca-Cola vending machines and taxis are PayPass-enabled. It will be offered initially to Sprint Nextel customers with the NFC-enabled Samsung Nexus S 4G smartphone.

At launch, people who already have a PayPass eligible Citi MasterCard will be able to add it to Google Wallet ‘over the air’ – PayPass cards are currently accepted by about 124,000 merchants across the US. Alternatively Google Wallet will also come with a virtual Google prepaid card that can be topped up using a bank payment card.

Ms Tilenius emphasised that while Google is launching the Google Wallet and the NFC service in conjunction with a set of partners, it is an open system, “that others are welcome to join.” She said Google hopes to offer the mobile payments system outside the US and that it will eventually be expanded to include “everything you find today in your wallet.” Google Wallet will start with offers, loyalty and gift cards but some day items like receipts, boarding passes and tickets will all be seamlessly synced to your Google Wallet.

In the US, the Google Wallet partners will compete directly with another NFC initiative called Isis that brings together three of the top four US mobile network operators – Verizon Wireless, AT&T and T-Mobile – and plans to launch with multiple payment networks and banks when it goes live in 2012.

“There seems to be a clear land grab in terms of owning the digital money space right now,” said Fred Huet, analyst at UK-based Greenwich Consulting. “A lot of players are serious about making it happen. Mobile operators are creating digital wallets, handset makers are creating digital wallets, PayPal has a digital wallet.”

Separately, PayPal on Thursday filed a lawsuit against Google, claiming the search group misappropriated trade secrets from PayPal’s mobile-payment business, according to the AP.

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