"To Google" currently means "to search," but it could soon mean "to pay." The search giant is working with MasterCard and Citigroup to embed Near Field Communication (NFC) payment technology into Android mobile devices.
A NFC-enabled phone could be used to pay for purchases simply by waving the device near a reader at a checkout counter. According to reports in The Wall Street Journal and elsewhere, Google is planning to roll out this technology to Android devices to increase its advertising business.
With phones and other mobile devices used for payment, Google could offer retailers data on their customers and, more important, help retailers direct ads and offers to users while they are in or near a store. The Journal said Google isn't expecting to get a percentage of transaction fees.
The plan being developed would enable holders of Citigroup-issued credit and debit cards to utilize a mobile-payment application, which is currently available for only one Android phone but will be supported on upcoming models.
Retailers' readers would be supplied by VeriFone Systems, which currently supplies credit-card readers to stores, including ones that allow customers to pay by waving or tapping NFC-enabled cards or other devices. According to some estimates, there are already as many as 150,000 NFC-enabled readers in U.S. stores.
It's expected that Google will provide the NFC readers free to stores. Tests of the Google system are expected in New York, San Francisco, Los Angeles, Chicago and Washington, D.C., within a few months.
Some consumers may think that, because the transaction takes place in the air, their account is more vulnerable than physically swiping the magnetic strip on a plastic card. According to industry observers, waving a credit card or phone to make a payment is actually more secure than swiping a card because the technology is more sophisticated.
NFC technology is quickly gaining momentum among wireless providers. Verizon Wireless, AT&T and T-Mobile have announced they will work with Discover Financial Services to create a system. Apple's iPhones and Research In Motion's BlackBerrys are expected to also implement NFC at some point.
Avi Greengart, an analyst with industry research firm Current Analysis, said that, while NFC technology "was certainly heating up," it has always been and remains "a chicken-or-egg situation," since stores want enough customers, and customers want enough stores. By seeding stores with the readers and providing a free app, Google would be trying to jump-start a solution.
Greengart added that getting consumers to see the advantages of waving a mobile device for payment -- including reducing the need to carry credit cards or other payment devices, increased security, and getting discount coupons at the moment of purchase -- will "certainly take an educational effort." But, he noted, changing consumer behavior in this instance might not be as difficult as other situations, since some consumers already use NFC-enabled credit cards or key fobs.