Google Wallet Demo Shows Bright Future for Mobile Payments

Google Wallet and Google Offers can combine to form the first ubiquitous mobile payment service via Android and other smartphones ... assuming consumers buy into the idea.

Google Wallet, the pending mobile payment service formed with Citgroup, MasterCard and Sprint, is an ambitious plan to get consumers to leave their physical billfolds at home and use their Android smartphones as their payment gateway at several retailers.

The concept, which relies on near-field communication (NFC) technology for close-range payment processing, is simple enough despite the fact that Google hurdled several technology and political barriers with its partners.

Wallet is the payment platform, but Google Offers is the key incentive to push users there, offering local deals to people who can scan them with the phone's NFC reader to store them and redeem them at point-of-sale terminals that read NFC. Deals will hit users' inboxes.

During a demonstration at Google's New York office May 26, Osama Bedier, Google's vice president of payments, showed how the service works from the Sprint Nexus S 4G smartphone. This Android 2.3 "Gingerbread" phone, equipped with an NFC chip from NXP, is currently the only handset that will run Wallet.

Bedier launched the Google Wallet application on the phone and attached the Wallet app to his Google account. This step is crucial to enable Wallet to sync all discounts collected from the Google Offers service that will serve as the key incentive for using Wallet, Bedier said.

Bedier entered a PIN number and opted to add a CitiGroup MasterCard to the service. After he entered his personal information, the info then reached the trusted services manager First Data, which communicated with the NFC chip and assigned that credit card to the phone.

Bedier also noted that a Google prepaid card comes with every Wallet. A consumer can simply click to add money from any credit card to the prepaid card.

Once this is set up, Bedier could tap and pay at any of the 124,000-plus retail locations in the U.S. (more than 311,000 locations worldwide) that accept MasterCard's PayPass mobile payment service.

Bedier also showed how to redeem a Google Offer. After searching for and finding a 20 percent off coupon from American Eagle, Bedier fired up his Wallet app, navigated to the Offers section, and scanned the coupon into his phone via the NFC reader in the phone.

An American Eagle representative joined Bedier on stage with a real point-of-sale terminal from VeriFone System and NFC reader from VivoTech. Bedier simply tapped his phone to the terminal to redeem his discount and pay for the shorts.