Google will test its mobile payment systems in New York and San Francisco in the next four months, as it scrambles for a head start in a soon-to-be-crowded market.
The Mountain View, Calif.-based company is racing to install thousands of special cash registers that accept payments from phones equipped with NFC, or near field communications, technology, which lets consumers pay for products and services by tapping a device against a register. The service offers an alternative to cash, credit and debit cards, and Google may combine consumers’ financial account information with gift-card balances, store loyalty cards and coupon subscriptions.
Google is one of the first out of the gate, trying to beat out longtime rivals such as Apple, and traditional credit card companies like Visa, PayPal, and even mobile carriers — all who want a piece of the $1.13 trillion industry. Visa is currently testing mobile payments for mass transit in New York using NFC technology in standard credit cards and smartphones. Meanwhile carriers like AT&T and Verizon will offer their own NFC payments system in a project called ISIS, and PayPal has its own system planned for later in the year too.
Apple too, intends to play a big role in the emerging market, but not yet. The company has pushed back NFC payments features until after the iPhone 5 release, expected this year. It is apparently concerned that there is no standardized system.
For Google, the window into consumers’ spending habits would be priceless, and play perfectly into its core business of targeted advertising. No figures are available, but the deployment will undoubtedly cost millions of dollars, an indication of the company’s determination to get ahead in the intensely competitive market.
Google has had its eyes on this emerging sector for some time. In December, it acquired ZetaWire, a startup specializing in mobile payments, in an early clue to its intentions.
In Japan, mobile payments have been commonplace for nearly a decade now, but it has been slow to roll out in the U.S. Besides initial consumer reluctance to trust mobile devices’ security for sensitive financial data, a mobile payments system requires point-of-sale devices that integrate NFC technology. Google is overcoming that barrier by installing its own systems for the pilot test.