Google (NASDAQ:GOOG) met its self-imposed goal to launch its mobile payment service this summer, as Google Wallet rolled out Sept. 19 to allow consumers in New York and San Francisco pay retailers with their mobile phones.
The launch came with a surprise bonus: Visa, American Express and Discover have joined Citi and MasterCard as credit card partners.
Unveiled in Google's New York office in May, Google Wallet includes a mobile application that communicates with smartphones equipped with near field communications (NFC), a short distance wireless technology.
Sprint Nexus S 4G phone owners will receive access to the Wallet through an over-the-air update. Once they receive the app, Nexus S 4G owners can tap their phones against an NFC-enabled cash register to pay for goods at some 20 retailers and restaurants.
Google Wallet will initially support Citi MasterCard and a Google Prepaid Card, which can be funded with existing plastic credit cards and used at any of the 300,000 stores worldwide that accept MasterCard PayPass. Google is offering a $10 bonus credit to users who set up the Google Prepaid Card in Google Wallet before the end of 2011.
Visa, American Express and Discover have also pledged to enable their cards to support the service in the future, Osama Bedier, Google's vice president of payments, said in a blog post.
Visa also said Google has licensed for payWave contactless payment software, the card provider's answer to MasterCard PayPass, at hundreds of thousands of cash registers all over the world. This deal will enable Visa account holders to make purchases using Wallet.
"Our goal is to make it possible for you to add all of your payment cards to Google Wallet, so you can say goodbye to even the biggest traditional wallets," Bedier said, adding the Wallet would be available on more phones in the future.
Wallet stands at the vanguard of a number of emerging mobile payments solutions, including those from Square and PayPal, as well as Isis, the mobile payment triumvirate formed by AT&T, Verizon Wireless and T-Mobile. Isis won't launch until 2012, but it will do so with support from all of the major credit card providers.
One of the challenges Wallet and all of its erstwhile rivals will have is selling the consumer on the notion of mobile payments via smartphones. There is no proof that consumers will embrace such technology after shoppers have spent the last several decades using plastic cards they simply swipe at checkout.
Moreover, Google developed its latest Android 2.3 "Gingerbread" operating system with NFC technology, the Nexus S 4G is currently the only equipped with a special NFC chip to securely store users' credit card data. And Google only has about 20 retail partners, including Macy's, CVS and American Eagle, where users can use Wallet.
Google believes it has the advantage of incentive with Google Offers, the company's Groupon clone service that entices consumers with discounts of 50 percent off or more for goods and services. Offers is live in three dozen cities around the country, including in San Francisco and New York, where Wallet is now available.
Deal aggregator Yipit claims Offers has suffered declines versus rivals Groupon and LivingSocial of late. However, a Google spokesperson said the company is pleased with Offers so far.