Google, Citigroup and MasterCard are preparing to launch a mobile payment system using near field communications (NFC) hardware embedded in smartphones.
The companies plan to build the into future Android handsets to allow users to pay for goods at suitably-equipped retailers, as well as manage credit and debit transactions online, according to a report in The Wall Street Journal.
Citigroup and MasterCard will issue cards that can be used to top up the smartphone's credit, while Google will benefit from increased exposure to its advertising platform and location-based offers, sources close to the project said.
The system is based on a trial operation Google has set up with VeriFone, which is expected to start operating this summer in US cities.
The involvement of major banking and payment vendors gives Google considerable clout with retail and online vendors in getting the system up and running.
Mobile manufacturers see NFC as the next logical step to increase smartphone use. RIM has confirmed that it will build the technology into its handsets, and Apple is also reported to be including it in the iPhone and iPad.
Frost & Sullivan predicts that NFC payment systems will be built into 53 per cent of global smartphones by 2015.
However, no global payment systems have yet been set up, and there are lingering worries about security that might limit uptake.
"Because it's contactless there's a perception that people can grab it from thin air, but it's actually a more sophisticated technology than credit cards with a magnetic strip, making it more difficult to steal a consumer's payment information," said Nick Holland, a mobile transactions analyst at Yankee Group.
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