Google teaming with MasterCard, Citigroup on mobile payments

Google (NASDAQ:GOOG) is collaborating with financial services providers MasterCard and Citigroup to embed contactless payment technologies in Android smartphones, The Wall Street Journal reports. Citing sources familiar with the initiative, the report states that the proposed payment system will enable debit and credit cardholders to fund point-of-sale transactions at participating retailers--in addition, Google will supply merchants with more insight into their customers, and will help them target ads and discount offers to Android users in and around their stores. Google is not expected to claim a percentage of the resulting transaction fees, but will instead generate revenue via advertising sales.

Sources indicate Google will leverage the Android payment platform to prove whether marketing targeted to specific demographics will lead directly to in-store transactions--in addition, the digital services giant stands to gain significant new insight into consumer spending behaviors. A Wal-Mart representative confirms the company spoke with Google about the technology, but characterized the talks as very preliminary and said it hasn't been asked to adopt it.

Earlier this month, Bloomberg reported Google is poised to roll out Near Field Communications-based mobile payment trials at stores in the New York City and San Francisco markets, enabling shoppers to purchase products and services by bumping their smartphone against a point-of-sale digital reader. The report states Google will pay for the installation of thousands of NFC-optimized cash register units produced by VeriFone Systems, with trials kicking off sometime during the next several months. Sources add the Google service may combine consumer's financial account information with gift-card balances, store loyalty cards and coupon services on a single NFC chip. Both Google and VeriFone declined to comment.

"A phone is a lot smarter than a card," VeriFone CEO Doug Bergeron tells the Journal. "It opens the door to a rich experience at the point of sale that retailers really covet." Bergeron declined to comment on VeriFone's relationship with Google.

In February, Google issued version 2.3.3 of its Android mobile operating system, adding new proximity-based Near Field Communications capabilities including an NFC reader/writer API. Speaking in November, Google CEO Eric Schmidt said the company also will leverage NFC technologies to enable consumers to touch Android smartphones together to share information or data.

The Google payment trials will go head-to-head against NFC point-of-sale tests spearheaded by Isis, a nationwide mobile commerce network unveiled in November 2010 by Verizon Wireless (NYSE:VZ), AT&T (NYSE:T) and T-Mobile USA. Isis plans to introduce NFC payment services in key geographic markets within the next 18 months, partnering with Discover Financial Services to build the necessary mobile payment structure; Discover Financial Services' payment network is accepted at over 7 million merchant locations nationwide. Isis adds that Barclaycard US is expected to be the first issuer on the network, offering multiple mobile payment products.

For more:
- read this Wall Street Journal article

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