Google, MasterCard, Citigroup, and Android— four big-wig names teaming up to incorporate a mobile payment system to new Android phone models.
The new mobile payment system could potentially revolutionize the customer to merchant payment system. Customers would be able to make purchases by waving their smartphones in front of a VeriFone digital reader at checkout counters.
The project will allow MasterCard and Citigroup issued credit and debit cards to pay for purchases by activating a mobile-payment app. This means that very shortly cell phones can double as a communication device and as an electronic wallet.
According to the Wall Street Journal, Google is planning to give credit card companies more data information about their customers in order to target ads and discounts to mobile-device users.
Mobile commerce is an untapped market, and many major credit cards are looking into that form of payment. American Express teamed up with the social network Foursquare to incorporate mobile payments and coupons into their platform, and many other credit card companies, cell phone service providers and manufacturers are following suit.
The most common e-wallet technology is “near field communication”, in which stores encrypted credit card data on a user’s mobile phone, so they don’t have to keep reentering information.
Last December, Google displayed the Nexus S smartphone that runs on Android 2.3 “Gingerbread” which came equipped with a demo application that collects near field communication. In November, Verizon, AT&T, and T-Mobile formed a partnership to launch Isis, their own mobile payment service which independently processes payments. Apple also plans to bring some mobile payment options to the iPhone 5. At the Mobile World Congress, major mobile phone manufacturers like Samsung, Nokia and Research in Motion laid down plans to equip their phones with NFC.
In the next several years, the market for mobile payments is expected to grow to $618 billion by 2016, according to a report by consulting firm Edgar, Dunn & Co. and sponsored by MasterCard.
Also another report issued this month by the Federal Reserve cited industry estimates that there were 70 million contact-less devices, including credit and debit cards, and 150,000 contact-less readers installed by merchants in the U.S.