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Google Inc.’s announcement concerning its plans for mobile payments and promotions, expected on Thursday, will herald a major effort by the Web search giant and partner companies to commercialize near-field communication (NFC) technology, sources tell Digital Transactions News. “This is not just another [NFC] pilot,” says a source close to the project. “All the partners will be extremely aggressive about this. This is a key strategy for them.”
Google is expected to announce it is working with Citigroup Inc. and MasterCard Inc. to bring payment capability to its Nexus S smart phone, an NFC-equipped handset it introduced late last year. The phone works on the Sprint Nextel network. According to press accounts released on Wednesday, the system will debut in New York and San Francisco, with more cities to be added later. “It will accelerate quickly,” the knowledgeable source says.
According to a story in The Wall Street Journal, at least three merchants have agreed to accept payments on the system, including Macy’s Inc., American Outfitters Inc., and the Subway sandwich chain. Citi will allow customers to load prepaid MasterCard accounts in the wallet that will work with the Nexus S handsets, NFC Times has reported.
Stephanie Tilenius, a former eBay Inc. and PayPal Inc. executive who is now vice president of commerce and payments at Google, confirmed at a Techcrunch event on Wednesday in New York that the company will be making a “partner announcement” related to mobile commerce on Thursday. New York is expected to be the venue of the announcement. In response to an inquiry from Digital Transactions News about details reported by various press outlets, a Google spokesman said the company “doesn’t comment on rumors.” MasterCard, Citi, and the three named merchants did not immediately respond to requests for comment.
The Google venture comes as major banks, card networks, and wireless carriers are launching NFC systems of their own after years of small-scale pilots. One of the most-watched projects, the Isis NFC joint venture put together by AT&T Mobility, Verizon Wireless, and T-Mobile USA, along with Discover Financial Services and Barclaycard USA, started out late last year with plans to create a proprietary payments network but has since changed direction, announcing it will focus instead on developing a mobile wallet open to all banks, networks, and merchants.
With NFC, consumers can wave or tap a handset equipped with an NFC chip and antenna near or on a point-of-sale reader to access a digital wallet stored in the phone. NFC phones also work with so-called smart posters to download content such as coupons, movie clips, or other media.
Google’s interest in NFC extends well beyond payments, observers say. The company hopes to use the technology to sell businesses the ability to deliver discounts, coupons, and other deals to consumers’ handsets, using geolocation and data from NFC-based purchases to tailor the offers. In this way, the search giant could replicate in the physical world the marketing prowess it has developed in e-commerce.
One weak point in Google’s strategy could be the relative scarcity of NFC-capable readers installed in retail locations. The installed based of contactless devices connected to retail points of sale is said to be less than 150,000 after years of banks’ efforts to market contactless cards. “What are they going to do about getting the terminals out?” asks George Warfel, consulting director for global payment solutions at Fiserv Inc. “That’s the Achilles heel.” To try to remedy that problem, Google is reportedly working with POS terminal companies Ingenico, VeriFone Systems Inc., and ViVOtech Inc., according to NFC Times.
