Google, MasterCard and Citigroup are reportedly working together on Near-Field Communication technology inside of Android phones to allow quick, contact-less payments at 150,000 NFC-ready terminals in the U.S.
According to unnamed sources quoted by the Wall Street Journal, Google would not collect a portion of transaction fees, opting instead to use purchasing data from customers to target retailers' ads and discounts for mobile phone users.
The project is reportedly in its early stages, although the Google-backed system is expected to be released sometime this year. Citigroup would allow its debit and credit card customers to pay for purchases at train stations and retail shops using an app on various Android phones enabled by an NFC radio chip inside the phone.
Google's interest in NFC -- combined with other announcements involving Visa and American Express -- show that NFC "is the new holy grail for...credit card issuers who see the hundreds of millions of smartphone devices being equipped with the technology as ripe for the picking," said Jack Gold, analyst at J. Gold Associates. "No one wants to be left behind."
MasterCard declined to comment on the report, although Ed McLaughlin, chief emerging payments officer for the company, said: "We are pleased to see great interest in NFC technology. It is a very high priority at MasterCard and we think that 2011 will be the year of mobile payments."
VeriFone Systems, which makes credit card readers used widely by merchants, is also reportedly involved in the Google project for NFC-capable Android phones.
There are about 150,000 contact-less NFC-based terminals already in McDonald's and DuaneReade drug stores and other locations in the U.S., and contact-less chips are already installed in many credit cards, unbeknownst to users.
A phone with an NFC chip installed or added through a special case would allow an application to be layered on over the NFC capability, even allowing person-to-person payments between two capable phones in close proximity, said Dave Wentker, senior leader of mobile product development at Visa.
Visa is working on four pilot NFC projects in San Francisco and New York with US Bank, Wells Fargo, Bank of America and Chase, Wentker said in an interview at International CTIA Wireless last week. MasterCard officials also held meetings, but its place in the race to offer NFC was unclear.
Wentker said the Visa trials, first announced in December, use BlackBerry and Android smartphones with special microSD cards installed. The trials also have used the iPhone 4 with a special case that switches the NFC antenna on and off.