Google NFC Mobile-Payment System Could Come at MWC

Susquehanna analyst Marianne Wolk believes Google might unveil a mobile-payment system, based on near-field communication, at Mobile World Congress this week.

Google could unveil a mobile-payment system, based on near-field communication technology, at Mobile World Congress this week, a financial analyst said Feb. 14.

Google declined to comment for this report.

NFC enables the exchange of data between two devices placed within a few inches of one another. Smartphones in Asia and Europe include NFC sensors and software to allow consumers to swipe their phones against payment terminals to pay for goods.

NFC mobile payments have the ability to be a multi-billion-dollar market in the U.S., but the lack of standards, as well as technology and other issues have been keeping mainstream adoption at bay.

Google last year moved to push NFC into the mainstream by adding native support for the technology in its Android 2.3 operating system, which currently powers the Samsung Nexus S smartphone. Armed with Nexus S handsets, Google employees have been testing NFC in Portland, Ore., to drive its Google Places local ad efforts.

That testing and the launch of the Android Market Webstore earlier this month led Susquehanna International Group research analyst Marianne Wolk to surmise that Google could announce details behind its NFC-based mobile strategy, including a possible mobile-payment platform.

Given the minimal success of Google Checkout, Wolk said Google is likely to work with partners on a mobile-payment strategy that leverages the nearly 200 million Gmail users and 2 million-plus advertisers.

An optimal scenario would have Google partnering with PayPal, but eBay has said this won't be the case. Google could partner with parties in the traditional payment sector for merchant payment relationships and payment processing. Whatever Google does to push NFC mobile payments, the challenges are many, Wolk said.

"We see several challenges to Google as a mobile-payment platform. Merchant acceptance is critical, and even with a well-connected merchant acquirer such as First Data or GPN, merchants are reluctant to adopt an offering that is not an industrywide standard," Wolk wrote in a research note Feb. 14.

The NFC Forum has created standards to unify NFC instantiations across MicroSD cards, chipsets and stickers, among other products equipped with NFC sensors.

She added that Google would also find it challenging to entice consumers to trust the search engine, which has suffered user-privacy problems, with their money. After all, Google has little experience in fraud prevention or risk management.

Wolk added that PayPal, with its proven track record, multiple payment options and developer ecosystem, is best-positioned to enable NFC mobile payments this year. She also wouldn't discount Apple, whose iTunes mobile-payment system is proven. Apple's iPhone 5 is expected to support NFC.

Additional Android handsets are expected to support NFC via Android 2.3 this year. These include the Samsung Galaxy S II and ZTE Skate smartphones, among others.