Google Wallet Mobile Payments Coming to New York, San Francisco

Google Wallet will launch this summer to enable consumers to pay for goods by tapping their Samsung Nexus 2 4G Android phones at NFC-fitted sales terminals at Subway, Macy's and other retailers.

NEW YORK - Google (NASDAQ:GOOG) teamed with Sprint and several payment providers on Google Wallet, a mobile-payment system that lets users pay for merchandise at retailers and restaurants with their smartphones.

Slated for a summer release, Google Wallet is a free mobile application that will let owners of Samsung Nexus S 4G smartphones from Sprint use their phone as a wallet at some 20 retailers and restaurants.

Users tap their phones to a point-of-sale system made to pay for goods. The idea is that users needn't carry a wallet stuffed with credit cards, loyalty cards and gift cards.

This is enabled by NFC (near-field communication) technology, a short-range wireless technology that allows communications between sensors brought within close proximity. The technology is widely adopted in Japan, where consumers wave their mobile phones in front of NFC-enabled sales terminal at checkout counters.

Citi, MasterCard and First Data are enabling payment for Google Wallet, which will be available in New York and San Francisco this summer, Stephanie Tilenius, vice president of commerce and payments, said at an event at Google's Chelsea office here.

Tilenius said that once the Wallet ecosystem is well in place, Google and its partners will rev up marketing programs to lure consumers.

Google Wallet will initially support Citi MasterCard and a Google Prepaid Card, allowing users to tap their Nexus S 4G phone to pay wherever MasterCard's PayPass mobile-payment service is accepted.

Google Wallet launched in conjunction with Google Offers, the search-engine giant's new local deals service and Groupon competitor.

Google Wallet will sync with a user's Offers, allowing users to redeem those deals via NFC at participating SingleTap merchants, such as American Eagle, Macy's and Subway, or by showing the bar code as users check out. Offers is rolling out in Portland, San Francisco and New York this summer.

Google is planning to develop APIs that will enable integration with numerous partners. Eventually, Google envisions that boarding passes, tickets, IDs and keys could be stored in the Google Wallet.

NFC has yet to catch on in the United States, with retailers slow to adopt the required readers and other infrastructure. Google and its partners aim to change that, looking to cash in on the expected 50 percent of NFC-enabled mobile phones they expect to see launched by 2014.

Google expects that, over time, software developers will write mobile applications that take advantage of NFC. Google would then pair ads, as well as local deals and discounts, with these services.

Last November Eric Schmidt, then-CEO, waved around a smartphone he said was fitted with NFC technology.

Google in December revealed the device as the new Samsung Nexus S, running the company's latest Android 2.3, or "Gingerbread," operating system. Gingerbread includes native support for NFC, which requires a special controller chip from chip maker NXP to operate.

The Nexus S 4G smartphone, launched by Sprint earlier this month, also carries such a chip. Google said it expects additional phones with NFC chips to launch this year.