Google to Announce its NFC Mobile-Commerce Initiative

Google has confirmed it will be making a “partner announcement” concerning its NFC mobile-commerce initiative, which will be held tomorrow in New York.

Google is expected to announce the launch of its NFC mobile wallet and m-commerce applications with Citigroup and MasterCard Worldwide, which will provide the payment service for the project. Among other companies likely to be at the event are processor and trusted service manager First Data.

Stephanie Tilenius, vice president of commerce at Google, confirmed the pending announcement today at the TechCrunch Disrupt conference in New York City. “We’re making a big bet on it as a company,” she said, speaking of NFC. “There is a lot of potential there.”

Google has been working for a number of months on the mobile wallet, along with mobile-commerce applications for its Android operating system, NFC Times reported in January. The launch of the project has been delayed several times, however. The wallet, which Google has developed with the help of its NFC chip supplier, NXP Semiconductors, will play host to payment applications provided by partners. Citi, along with MasterCard, has been working with Google on the concept for some time.

Plans call for Citi to issue a prepaid MasterCard PayPass application to be loaded onto Google’s Nexus S and, later, perhaps other Android phones, NFC Times reported last week.

The large Subway sandwich chain in the United States will participate in the launch, according to sources. A Wall Street Journal article reported this as well and that other merchants will include the Macy’s department store and clothing chain American Eagle Outfitters. Starbucks also has been approached by Google, among other merchants, sources told NFC Times. It's not clear whether Starbucks will participate.

None of these merchants now reportedly accept contactless payment in the United States. But more than 100,000 merchant outlets already have readers installed stateside and, therefore, could accept payment from a PayPass application on the Nexus S.

Update: The first phase of the service is expected to launch as early as tomorrow in New York and San Francisco and possibly a few other cities. A larger phase of the project will start in September of this year. Google hopes to have at least 500,000 Nexus S phones activated in the pockets of U.S. consumers by the end of the year, NFC Times has learned. End update.

Google is keen on using NFC and smartphones supporting Android to enable merchants and consumer products companies to deliver targeted advertising and offers to prospective shoppers, based on their location, buying preferences and other data.

It would use NFC to enable consumers to tap tags embedded in smart posters to download coupons and other offers and perhaps product information, as well as to pay, sources have said. These NFC services could work along with cloud-based apps. Google is also expected to offer its Google Places app, which enables users to tap tags embedded in stickers or decals on merchant storefronts to download information about the businesses and to rate and review the establishments.

The Web giant has been talking to other banks, in both North America and Europe, to provide the payment piece of the mobile-commerce service, NFC Times has learned. First Data is expected to provide processing and TSM services for the U.S. launch, the latter services with its technology partner SK C&C USA. Google also is reportedly working with such point-of-sale and contactless reader vendors as VeriFone, Ingenico and perhaps Vivotech to enable users to tap their phones to pay and redeem coupons and other offers at the checkout counter.

The launch will put the Citi-issued PayPass application inside Google’s mobile wallet, where it will be stored on the embedded secure chip in the Nexus S, sources earlier told NFC Times. Google is expected to have overall control of the secure chip and application-programming interfaces, or APIs, to access it, said the sources. Google commissioned Samsung Electronics to make the Nexus S, which is distributed mainly through consumer electronics stores.

Such phone makers as BlackBerry producer Research in Motion and Samsung, manufacturer of other Android handsets, also are interested in controlling the embedded secure chip in their phones. 

This sets up a possible showdown with mobile operators over control of the secure elements in NFC phones. Google's m-commerce initiative could represent the first shot in a coming mobile wallet war, say some observers.

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