Google is expected to launch a mobile payment system on Thursday that allows consumers to buy items and checkout with smartphones rather than traditional credit/debit cards. The system will run on the Google’s Android operating system and will be available on phones from Sprint Nextel Corp.
The service would allow users to pay for retail purchases by holding their smartphone up to a specialized reader at checkout counters.
Google has been working with MasterCard, the world’s second-largest credit card processing network and Citigroup Inc to develop this mobile payments system. During the trial period, the service will be available only for Citigroup credit/debit card users.
Google is planning to show off the technology and has invited reporters to attend a “partner event” on Thursday in New York.
Ever since Google launched the Nexus S with NFC support, there has been speculation that it was planning to jump into the mobile payments arena. It seems that Google has already been working on such a mobile payment system, according to a report by WSJ.
It has teamed up with Mastercard and Citigroup to create a system which would allow Android smartphone users to make purchases by waving their smartphones before a small reader when checking out. In the early stages, the mobile app will be available only for Citigroup credit/debit card users.
Google will use readers by Verifone, which is a major player in the mobile payments segment. The mobile payments app will be made available for “one current model and many coming models of Android phones”. The current model is most likely the Nexus S, since it is the only one to have NFC support.
Google will be handling all the shopping cart data as well as the shipping information. Google won’t be charging any transaction fee for acting as the intermediary, but it will be able to send targeted ads and offers to users of its application. If this service attracts a lot of users, Google will have access to a treasure trove of personal information. Google has also applied for a patent for a “distributed electronic commerce system with centralized point of purchase”.