NEW YORK -- Tech juggernaut Google rolled out its highly anticipated mobile-payments system on Thursday, with company officials unabashedly declaring the advent of "a new era of commerce." Dubbed Google Wallet, the new product launched with a closely related initiative: Google Offers, a targeted daily-deal service that will compete with the first-movers Groupon and LivingSocial.
Google's move instantly accelerates the booming point-of-sale digital payments arms race, and represents the most comprehensive and ambitious foray into mobile payments by any of the large players jockeying for position in the nascent but already-booming arena that Google says it believes will quadruple over the next four years.
"We believe the shopping space has not yet been fully transformed by technology," Stephanie Tilenius, Google's Vice President of Commerce, told a packed press conference at its New York City headquarters.
Although Google's digital wallet news was expected, Google Offers had not been on the press tech's radar for today's event. Many have taken for granted, however, that Google would build what it could not buy after Groupon reportedly spurned a $6 billion offer.
Google is pinning its hopes for a big piece of the action on a so far little-used technology, at least on these shores: near field communications (NFC), a short-range tool that operates on wireless frequencies similar to RFID chips and tags.
At launch, Google Wallet will be compatible only with the Nexus S 4G device, available on Sprint. Tilenius said Google expects to add functionality for more phones over the next several months.
Very few handset makers have announced plans to include NFC chips. It's anybody's guess if Apple, whose iPhone is the market leader, will do so for its next-gen version this fall, although experts believe that the company is working with the technology.
Google and Apple are not the only big players experimenting in mobile payments.
One such effort is ISIS, a project spearheaded by AT&T, Verizon, T-Mobile (which AT&T is acquiring) and Discover Financial Services, which markets the Discover credit card.
Twitter co-founder Jack Dorsey unveiled Square Register earlier this week, a new service that will allow merchants to manage inventory and run analytics against their sales -- without expensive equipment and high fees. That news followed Visa's announcement that it plans a digital wallet based on NFC.
The search titan has lined up a formidable list of partners for Google Wallet, including Citi, MasterCard, First Data and Sprint on the technology side, and Macy's, Subway, Walgreens and Toys "R" Us, among others, on the retail side.
Google Wallet will operate on MasterCard's PayPass network, which is currently operational at 300,000 retail locations, including 120,000 in the United States. Citi, the Wall Street giant, will be the lead banking partner. Sprint, which has deep ties to Google thanks to collaboration on the Android operating system, will be the lead wireless service provider.
While NFC handsets may be in short supply, Google is leveraging the significant adoption of its Android smartphone operating system -- which it gives away free to handset makers. More than 100 million devices are running Android in the marketplace already, said Osama Bedier, vice president of payments at Google, and the company is activating a whopping 400,000 phones a day.
So, Google doesn't have a chicken-and-egg problem: It is reasonably banking on the natural consumer upgrade cycle for smartphones to help fuel demand for NFC phones, which in turn will put Wallet in more pockets.
But this won't happen overnight.
Forrester Research Analyst Charles Golvin said Google's move was "an early salvo in what will be a long and hard-fought battle to change consumers' payment behavior and, as a potential result, the makeup of the payments landscape."
"Relying on an installed base of phones that is today indistinguishable from zero, a single payment system, a single card issuer, and a modest network of merchants capable of accepting these phone-based payments means that the near-term impact will be negligible," he said.
Google will begin field-testing the new system in San Francisco and New York immediately, officials said, and will roll the service out more broadly over the summer.
Photo: Osama Bedier, vice president of payments at Google, and Jonathan Wall, a lead Google Wallet engineer, discussing the new product at a press conference in New York City on May 26th, 2011. Sam Gustin/Wired.com
See Also:
- Wired.com FAQ: Near Field Communications’ Big (Money) Moment
- Report: Google to Test Mobile Payments This Spring in NY, SF
- Report: Credit Giants Team Up With Google to Drive Mobile Payments
- Visa Digital Wallet Accelerates Mobile-Payments Race
- Report: Google, Sprint Join Mobile-Payments Arms Race
- PayPal Pokes Into POS ‘E-Wallet’ Market
