NEW YORK CITY -- Google announced an NFC mobile payment system that will let shoppers wave their smartphones at the point-of-sale terminal instead of swiping their credit or debit cards. At a press conference here on May 26, the Internet giant unveiled two mobile products, Google Wallet and Google Offers.
Initially, the new mobile commerce services will work on select Android-based phones sold on Sprint Nextel's network. Both products will be tested in New York and San Francisco. Google Wallet is expected to roll out nationwide in late summer.
The company said it plans to bring all parts of the retail experience together to create "tomorrow's best shopping experience." Both services will combine coupons and payments. For example, discount offers on products purchased regularly by a patron will appear on his or her phone; payment is made at checkout by moving the handset in proximity to a terminal, which will charge the user's account, and the receipt then is sent to the phone. Loyalty points are added to a phone and, if an item is out of stock at a store, a popup reminds customers that they can purchase it online.
The services use near-field communications (NFC), a very short-range wireless technology that allows users to pay for things in retail locations by holding a device equipped with a special chip close to a specialized reader at a POS checkout terminal. Google's announcement follows the rollout of its latest Android mobile phone software, which supports NFC, and its Nexus S phone (from Samsung), which includes an NFC chip.
Because Google is marketing one of the two phones in the world with NFC chips inside (Nokia's C7 is the other), and because it writes its own phone software, it is best positioned right now to offer mobile-payment products, some observers say.
NFC as an m-commerce implementation has been around for a while. In the vending industry, Microtronic is one company that offers NFC-compatible devices for vending machines. NFC uses the same data communications protocols as EMV-compliant contactless smart cards ("tap-and-go" media). EMV is short for Europay, MasterCard and Visa, a global standard for interoperation of integrated circuit (IC) or "chip" cards.
Google is partnering with Sprint, MasterCard, Citi and FirstData for payment services. Macy's, Subway, Walgreens, Toys R Us, Bloomingdale's, Guess and Noah's Bagels are among the first participating retailers.
Google reportedly will not charge a fee for Google Wallet transactions. The company's main interest is collecting and selling data on consumer buying habits.