March 28, 2011

The Wall Street Journal reported this morning that Google, Citi, MasterCard and Verifone are working together on a near-field communication mobile payment initiative that will launch later this year.

The project, the paper reported, will take advantage of NFC technology built into the Nexus S Android phone that Google developed with Samsung. However, in its current version this phone's built-in NFC technology can only read tags or "smart text," it cannot send information over NFC. For payments to take place, another NFC element would need to be in place. MasterCard's PayPass technology, which uses an embedded computer chip and radio frequency antennae to send payment details to the MasterCard network, could be the missing piece.

According to the article, Google is not planning to take a cut of the mobile payments themselves, but wants to glean information about the payments to enhance its advertising business. "The planned payment system 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 stores," the article says.

The initiative will let holders of Citigroup-issued debit and credit cards pay for purchases by activating a mobile-payment application developed for Android phones, the Wall Street Journal says. These customers also would receive targeted ads or discount offers, which Google hopes to sell to local merchants. VeriFone card readers would accept the payments at retailers.

When we contacted the alleged players in this project this morning, none would confirm that it exists. MasterCard and Google representatives both said they could not comment on rumors and speculation. Asked directly if MasterCard is working with Google, a MasterCard executive said, "As a member of the NFC Forum, we work with all stakeholders in the mobile payments value chain, to ensure the industry adopts an 'open' strategy that would allow consumers to decide which accounts to tie to their phone." However, Google is not on any of the forum member lists posted online. A VeriFone spokesman said he cannot comment as it relates to Google.

It would be logical for Citi to partner with MasterCard, as its rivals Bank of America, Chase, Wells Fargo and U.S. Bank are all working on mobile payment trials with Visa and its PayWave NFC system. But it would be even better if all the major players in the payment industry could agree on a common standard for mobile payment technology in the U.S.

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