Google joins a whole range of companies that want an in on the NFC market, and which may account for a third of the $1.13 trillion in global mobile-payment transactions projected for 2014, according to IE Market Research. In November, Verizon Wireless, AT&T, and T-Mobile USA formed a venture called Isis to offer an NFC-based service in 2012. Visa is testing contactless payments and planning to roll them out commercially in mid-2011, says Bill Gajda, Visa's head of mobile innovation.
"It's a land grab," says Jaymee Johnson, a spokesman for Isis. "Folks are sort of jockeying for position." "
EBay's PayPal may start a commercial NFC service in the second half of 2011, says Laura Chambers, senior director of PayPal Mobile. The system would also power peer-to-peer NFC transactions. For example, a restaurant patron might beam his share of the bill to his dining companion's phone. PayPal is open to partnering on NFC payments with companies such as Google, Chambers says.
Speaking about NFC at a technology conference in November, Google Chief Executive Eric Schmidt said, "You'll be able to walk in a store and do commerce. You'd bump for everything and eventually replace credit cards." Andy Rubin, Google's vice-president for engineering, declined to comment on future services and products.
A single NFC chip on a mobile phone would hold a consumer's financial account information, gift cards, store loyalty cards, and coupon subscriptions, say the people familiar with Google's plans. Users may also be able to make online purchases from their phones. By scanning a movie poster, for instance, a consumer might read reviews and use the Google service to purchase tickets.
"NFC could displace the cash register," says Charles Walton, chief operating officer for NFC chipmaker Inside Secure. "This is going to come superfast."
Google may be in a good position to disrupt the payments industry because merchants and consumers already use its technology widely. Some 300,000 people activate phones daily that use its Android software. On December 6, Google released its newest version of Android, called Gingerbread, which has some NFC features, such as reading information from NFC tags. More functionality "will come out pretty quickly," says Google's Rubin. On the market since December 16, the NFC-enabled Nexus S phone, developed with Samsung Electronics, will serve as a test for a Google payment and ad service, says one of the people knowledgeable about Google.
Last year, Google bought Zetawire, a Canadian startup with a patent on a way to combine a phone-based wallet with a reward-and-loyalty system. Google Ventures, the company's venture capital arm, also invested in Corduro, a closely held developer of mobile-payment solutions in Southlake, Texas.