Google's Payment Tool Emerges, Adds New Partners
Source: John Letzing and Andrew R. Johnson
--Google adds partners to its mobile phone payment tool
--Google rolling out the service now
--Hurdles remain for broad adoption
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By John Letzing and Andrew R. Johnson
SAN FRANCISCO (Dow Jones)--Search giant Google Inc. (GOOG) has begun making a payment tool available via mobile phones and is adding new credit card partners to the effort, moves that come as technology giants vie for a bigger presence in the payments industry.
Google's announcement Monday makes it a leader in the race to offer consumers the ability to pay for purchases by swiping a phone. Such a process is seen helping Google's advertising business and improving retailers' relationships with consumers. Hurdles remain, though, such as getting the needed technology into phones and stores.
In a blog post Monday, Google said it has released its Google Wallet application to carrier partner Sprint Nextel Corp. (S) and is rolling out the tool via an "over-the-air update" to a Sprint phone model that runs on Google's Android software.
Google also said it expects to add Visa Inc. (V), Discover Financial Services (DFS) and American Express Co. (AXP) to future versions of Google Wallet. The Mountain View, Calif.-based company's initial card partner is MasterCard Inc. (MA).
"Our goal is to make it possible for you to add all of your payment cards to Google Wallet," Google Vice President of Payments Osama Bedier wrote in the company blog post. The emerging mobile payments market is expected to reach $214 billion in dollar volume by 2015, according to a November report from Boston-based research firm Aite Group LLC.
Google had originally announced Google Wallet in May. The service enables users of phones with the technology installed to physically tap them at a store and complete payments.
The application relies on a chip technology called near-field communication, or NFC, that allows a person to wave their phone in front of a special point of sale terminal to make a purchase. Smartphones and the payment terminals must be equipped with the NFC technology in order for the system to work.
Google is aiming to make mobile payments easier in a bid to boost its advertising business. The payments service will allow Google to offer retailers more data about their customers, and help them target ads and discount offers to mobile phone users near their stores.
Unlike some other forms of local advertising, Google Wallet allows Google to prove whether ads targeted at certain groups led directly to in-store sales.
Sprint said in its own statement Monday that Google Wallet will be available at retailers including Macy's Inc. (M) and Subway.
Visa said Monday that it is licensing its contactless technology called payWave so that its credit, debit and prepaid cards can be loaded into Google Wallet. The deal will allow banks that issue Visa-branded cards to enable their customers to add their cards to the service, though the banks must still sign separate agreements with Google, said John Partridge, president of Visa.
Google is one of a number of companies seeking inroads in a payment industry that's transforming as new technologies are introduced.
EBay Inc. (EBAY), for example, is undertaking an ambitious effort to expand its PayPal payments service, by introducing mobile payment technologies that work in tandem with traditional, brick-and-mortar retailers.
Mobile phone carriers are making their own moves. Last year, Verizon Wireless, AT&T Inc. (T) and T-Mobile USA formed a mobile payments venture called Isis. Visa is also a partner in Isis, part of its multipronged approach to tapping the emerging mobile payments market. Visa also is planning to roll out its own mobile wallet service this fall, Partridge said.
"We believe that we should allow our banks and by extension of our banks, their cardholders, to be able to participate in being able to choose how they want to make their payments," Partridge said. "For us, licensing the technology allows the Visa cards to be put into the Isis wallet or the Google Wallet or our own wallet."
Meanwhile, Verizon has said it will enable customers to receive payment technology from American Express in mobile phones and tablets.
The Google Wallet effort comes as Google also expands its presence in local coupons and online reviews. Earlier this year, Google began its Google Offers local coupon service, which the company has said can be used in conjunction with Google Wallet.
The Google Wallet technology has already begun appearing at certain stores.
At a Peet's Coffee & Tea Inc. (PEET) location in central San Francisco, Google Wallet has been installed and is expected to be functional by Sunday, according to a store manager.
-By John Letzing, Dow Jones Newswires; 415-765-8230; john.letzing@dowjones.com
-By Andrew R. Johnson, Dow Jones Newswires; 212-416-3214; andrew.r.johnson@dowjones.com
--Amir Efrati contributed to this article.
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