Google Preparing Mobile Payments System with Citigroup & MasterCard (Report)

Google is preparing to launch a mobile payments system in partnership with MasterCard and Citigoup, Inc., according to a report in today’s The Wall St. Journal. The service is the long-rumored mobile venture utilizing NFC (near field communication) technology, which allows customers to wave or tap their phones at the point-of-sale to pay for purchases. Google isn’t taking a cut of the transaction fees, says the report, but would use the system to provide retailers with more data about their customers so they could better target their ads.

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The WSJ says the project is still in its early stages, and would initially be available to Citigroup card holders with either debit or credit cards. The cards would be activated for use with the mobile payments system supported handsets like Google’s flagship phone, the Nexus S, developed in partnership with Samsung. The Nexus S includes an NFC chip which enables the phone to use a short-range wireless technology known as near field communication. Not only intended for mobile payments, NFC can be used to exchange any data between two NFC-enabled devices that are in close proximity to each other.

With Google’s system, customers could use their mobile phones to make purchases at participating retailers, track spending on their phone and even received targeted ads and discounts from merchants sent directly to their handsets.

On the merchant’s side, VeriFone, which makes card readers and other POS equipment, would be involved in the project.

In a separate report from last week, Bloomberg had said that Google would begin testing a mobile payments system in stores in New York and San Francisco within four months. The company will pay for the installation of equipment from VeriFone to accept the mobile payments.

This report also named Vivotech, a mobile payments and marketing company, as being involved in the project. It also said that other cities, including Los Angeles, Chicago and Washington D.C. may be future test markets for the project.

Earlier this year we looked at a number of Google’s initiatives, that, when tied together, painted a relatively detailed picture of Google’s mobile payment plans, including Android’s support for NFC, Google’s local reviews program called Hotpot and its NFC-enabled windows stickers, Google’s acquisition of Zetawire, a mobile payment company working on a mobile wallet solution and more.

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