Google, MC, and Citigroup To Enable SmartPhone Retail Payments

The Wall Street Journal reports that Google is teaming up with MasterCard and Citigroup to embed Near Field Communication (NFC) technology in Android mobile devices that would allow consumers to make purchases by waving their smartphones in front of a small reader at the checkout counter.

The planned payment system, which is still in the discussion and planning stage, would allow Google to offer retailers more data about their customers and help them target ads and discount offers to mobile device users near their store. Google isn't expected to get any percentage of the transaction fees.

The project would allow holders of Citigroup-issued debit and credit cards to pay for purchases by activating a mobile-payment application developed for Android phones that would turn the phones into an "electronic wallet." Phone users would also be able to get targeted ads or discount offers that Google hopes to sell to local merchants. Users could manage credit-card accounts and track spending through an application on their smartphone, as well.

The venture also involves VeriFone Systems, which makes credit-card readers for cash registers. VeriFone would roll out so-called contactless devices or readers that enable consumers to pay with a wave or tap of a credit or debit card using NFC. As with conventional credit card transactions, card companies would cover the cost of unauthorized purchases. NFC technology itself is not particularly vulnerable, and is actually more sophisticated than credit cards with a magnetic stripe.

The project could raise privacy concerns, however, because it would allow Google to track whether ads targeted at certain groups of people led directly to in-store sales, and by helping to facilitate redemptions of coupons and discounts could also yield insight into consumer spending behavior.

See also my posts on The SmartPhone Wallet and ISIS.