Google chief executive Eric Schmidt says phone chips will replace credit cards as a way to pay for goods at tills. Photo: Bloomberg.
Google chief executive Eric Schmidt says phone chips will replace credit cards as a way to pay for goods at tills. Photo: Bloomberg.

Google to gain mobile pay foothold

By Time of article published Jan 5, 2011

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Google is considering building a payment and advertising service that will let users buy milk and bread by tapping or waving their cellphone against a register at checkout, according to two people familiar with the plans.

The service might debut this year, the people said. The service is based on near-field communication (NFC) technology, which can beam and receive information wirelessly from 10cm away.

Google joins a slew of firms that want in on the NFC technology market, which may account for a third of the $1.13 trillion (R7.45 trillion) in global mobile payment transactions projected for 2014, according to IE Market Research.

In November, Verizon Wireless, AT&T and T-Mobile USA formed a venture called ISIS to offer an NFC-based service in 2012. Bill Gajda, Visa’s head of mobile innovation, said the credit card company was testing contactless payments and planning to roll them out commercially in mid-2011.

“It’s a land grab,” said Jaymee Johnson, a spokesman for ISIS. “Folks are sort of jockeying for position.”

eBay’s PayPal might start a commercial NFC service in the second half of this year, said Laura Chambers, the senior director of PayPal Mobile.

The system would power peer-to-peer NFC transactions. For example, a restaurant patron might beam his share of the bill to his dining companion’s phone, Chambers said.

She said PayPal was open to partnering on NFC payments with firms such as Google.

Speaking about NFC at a technology conference in November, Google chief executive Eric Schmidt said: “You’ll be able to walk in a store and do commerce. You’d bump for everything, and eventually replace credit cards.”

Google’s vice-president of engineering, Andy Rubin, declined to comment on future services and products.

A single NFC chip on a cellphone would hold a consumer’s financial account information, gift cards, store loyalty cards and coupon subscriptions, the Google sources said.

Users might also be able to make online purchases from their phone. By scanning a movie poster, for instance, a consumer might read reviews and then use the Google service to purchase tickets.

“NFC could displace the cash register,” said Charles Walton, the chief operating officer for NFC chip maker Inside Secure. “This is going to come super-fast.”

Google may be in a good position to disrupt the payments industry because its technology is already used by merchants and consumers. About 300 000 people activate phones daily based on its Android software.

Google is ramping up efforts to seed merchants nationwide with NFC tags, which can be read by NFC-enabled phones.

Since mid-December, Google has handed out hundreds of NFC kits – including window tags and fortune cookies to give to customers – to businesses in Portland, Oregon, where it is testing a project called Hotpot.

Global shipments of NFC phones will jump to 220.1 million units in 2014, up from 52.6 million last year, according to consultant ISuppli.

Last year, iPhone maker Apple hired Benjamin Vigier, an expert on NFC technology. The company also filed for a patent for a way to transmit payments from one cellphone to another using NFC.

An Apple spokeswoman was not available for comment.

Research In Motion (RIM), which makes the BlackBerry, filed for a patent for a system that makes NFC payments more secure. RIM spokeswoman Marisa Conway was not available for comment.

An NFC payment and ad service may let Google grab a bigger piece of the US cellular ad business. It ended 2010 with 59 percent of the $877 million market. – Bloomberg

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