Google Unveils App for Paying With Phone

Google takes a page from Japan with e-wallet #7958

Image by Nemo's great uncle via Flickr

Google is among the first out of the gate in the attempt to make leather wallets go the way of the typewriter.

On Thursday, the technology giant introduced Google Wallet, a mobile application that will allow consumers to wave their cellphones at a retailer’s terminal to make a payment instead of using a credit card. The app, for the Android operating system, will also enable users to redeem special coupons and earn loyalty points.

Starting this summer, the wallet will be available on the Nexus S 4G phone on Sprint and able to hold certain MasterCards issued by Citibank. It will also hold a virtual Google Prepaid MasterCard.

The mobile wallet will work at any of the 124,000 merchants that accept MasterCard’s PayPass terminals, which take contactless payments, and more than 300,000 merchants outside the United States. The wallet is powered by a technology called near-field communications, which is incorporated into a chip in mobile phones and sends a message to the merchants’ terminals.

“Eventually, you will be able to put everything in your wallet,” Stephanie Tilenius, vice president for commerce at Google, said at a news conference.

That grand vision will take a while to come to fruition. Various players have been working on mobile wallets for years, but they have not gained traction because the companies have not been able to agree on how they would be paid or who would control the wallets. Cellular carriers, banks, credit card issuers, payment networks and technology companies all have a stake in this battle.

With its wallet, Google plans to make money by offering consumers promotions as they shop. For instance, it plans to introduce “Google Offers” — advertising deals from local and online businesses that can be found online or sent through the phone. Like Groupon, Google will collect a fee from participating retailers every time a person redeems a coupon. Citibank will collect the same fees as it would in a traditional credit card transaction.

Google Wallet will need some time to become fully functional nationwide. While Google has worked with more than 15 retailers, like American Eagle Outfitters, Bloomingdale’s, the Container Store and Jamba Juice, they all need to upgrade their payment terminals. When they do, consumers will also be able to store and redeem deals with the wallet. Merchants in New York and San Francisco are expected to be ready this summer.

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