Web giant Google revealed details of its forthcoming mobile payments system, Google Wallet, in New York yesterday.
Google Wallet is a smartphone application, exclusive to the company’s Android operating system, that stores the user’s credit card details. When used in conjunction with near-field communications equipment installed in mobile devices, it will allow consumers to make payments simply by waving their smartphone near a reader.
The system uses Mastercard’s PayPass contactless payment infrastructure. To begin with, it will only be available to US customers of both Mastercard and banking group Citi.
Google says that over 300,000 merchants have agreed to accept payment using the systems.
The company said that it will not take a cut of transactions or charge banks to use the service. And unlike many other services Google offers, it will not track data about the users’ behaviour.
Instead, Google will serve advertising through the app and combine it with social commerce service Google Offers, charging businesses to offer group discounts to Google Wallet users.
According to Gartner analyst Alistair Newton, the system may also benefit Google by attracting users to Android devices. "There will be some monetisation for them in the fact that you’ve bought an Android handset because you want to use this application," Newton told Information Age today.
Newton’s remarks demonstrate how mobile payments may become a point of differentiation on the highly competitive smartphone market.
Apple, Google’s chief rival in that market, is believed to be developing its own mobile payments system. There have been unconfirmed rumours that it may not use near-field communications, possibly creating a technological schism in mobile payments.
Just as Google announced the new service, auction giant eBay and its online payment subsidiary PayPal filed a lawsuit against the company about mobile payments. The suit accuses Google of "misappropriating" trade secrets relating to mobile payments after it hired two former PayPal executives who it says had been working on a mobile payments system for Android.
Google has yet to comment on the suit.