Mobile

Google steps into mobile payments with Google Wallet, integrates with Google Offers

Google today finally spilled the beans on its long-rumored mobile payments platform, Google Wallet, at a New York City event. Unexpectedly, Google also tied in some announcements about its Groupon competitor, Google Offers.

The two services will make up an open ecommerce platform, said Stephanie Tilenius, Google VP of commerce. “Our goal is to bring together all the pieces of the ecosystem. Your phone will be your wallet. Just tap, pay, and save,” she said.

In short, Google Wallet is an Android app that Google hopes will replace the more tedious items in your regular wallet. It will house credit cards, loyalty cards, and gift cards. In a blog post today, Google delved into the potential of Wallet: “When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you. Someday, even things like boarding passes, tickets, ID and keys could be stored in Google Wallet.”

Google Wallet will be powered by NFC, or near-field communication, a technology that lets you swipe your phone or other device over a receiver to make an electronic payment in a store. A MasterCard representative at the event described NFC as the next stage of evolution for payments. He said that the NFC trials MasterCard has been doing have laid the foundation for Google Wallet. Over 120,000 merchants in the US are ready to use Google Wallet.

Tilenius also pointed to some statistics about the growth of ecommerce: In 1998, 70 percent of consumers said they wouldn’t use the internet for financial transactions. By 2009, consumer opinion had flipped and 70 percent were using their credit cards online. She said that ecommerce was in a position to exceed a trillion dollars in sales by 2013.

Tilenius said that over half of US smartphone users have used their phones to shop or research purchases. “We believe 2011 and beyond will be the age of MoLo — Mobile Local commerce,” she said. By 2014, she said, half of the smartphones sold in the US will be equipped with NFC. She also mentioned that Google Wallet is much more secure than typical credit cards, since there’s a screen lock, pin, and the app never displays your full credit card number.

Currently, Google Wallet will work with Citi MasterCards and Google’s own digital prepaid card, dubbed the GCard, which will be the only way for users without Citi cards to pay with Wallet. Users will be able to tap their NFC-enabled phones at MasterCard PayPass terminals to make purchases. Eventually more credit cards will be added.

Not surprisingly, Google is launching Wallet in New York City and San Francisco first (we reported months ago Google was testing NFC in both cities). More cities will be added “in the coming months.” Launch retailers include Macy’s, Toys’R’Us, Walgreens and Subway. The Nexus S will be the only phone that can use Google Wallet for now, but more NFC-equipped phones are expected soon.

The company also talked a bit about Google Offers, which, as we already know, will deliver daily Groupon-like deals to your inbox. What’s more intriguing is how Google has integrated Offers with Wallet and retailers. Offers will be tied into the Wallet app, and you’ll be able to tap your phone to pay at retailers with SingleTap devices, or just use your phone to display a barcode that merchants can scan to complete a purchase.

Just like the mobile payment startup Square, Google plans to offer digital receipts for Wallet purchases this fall.

Google says Wallet will be free for its partner merchants to use. Right now it’s certainly more important for the company to get more retailers on board.

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