Google wants a new piece of your wallet. Actually, it wants your Google-powered cell phone to be your wallet.
The search behemoth announced on Thursday a new payment system that will link your smartphone to your credit card or a reloadable prepaid card.
And a metro Atlanta company, well-known in financial tech circles but not to the general consumer, is right in the center of it.
The product, called Google Wallet, lets a shopper pay for purchases and access promotional offers right on his or her smartphone. Similar technology is widely used in parts of Asia.
Payment processing giant First Data, based in Sandy Springs, joined Google, MasterCard, Citibank and Sprint in the latest joint venture, which is expected to launch nationwide this summer.
Trials are already underway in New York and San Francisco.
It’s the latest salvo in the ever-burgeoning battle over mobile payments. Some of the nation's most powerful companies are joining competing alliances to corner this young payments market.
Rivals AT&T, Verizon Wireless and T-Mobile announced their own joint venture last year, ISIS, that could be online nationwide sometime in 2012. Visa also has announced its own digital wallet system.
Initially, Google’s digital wallet will only be available on its Nexus S 4G smartphone on Sprint’s network. The system will be made available to Android phones as a downloadable app and usage is expected to grow as more phones with NFC technology come to market.
Many physical hurdles have prevented widespread use of cellphone payments in the U.S. Though the technology is relatively commonplace in parts of Asia, few retailers in the U.S. have it.
Google and the adoption of major banks breaks the “inertia” holding back mobile payments, said Tim Sweeney, founder of FinTech Partners in Atlanta.
Several national retail giants, including Macy’s, American Eagle Outfitters, Bloomingdale's, Subway and Walgreen’s, are among the first on-board.
“It’s just a matter of time before this becomes more commonplace,” Sweeney said.
Google’s system uses NFC, or near field communication, technology to transmit a consumer’s payment information to a receiver at the register. Encrypted data is transmitted with a tap or a swipe of the phone with the receiver.
At the core will be MasterCard’s PayPass system, which allows the credit giant’s customers to pay by tapping enabled cards. But Google is also launching a reloadable virtual prepaid card.
First Data, which handles electronic processing at 4.1 million merchant locations worldwide, will play multiple roles.
The company is providing the technology to securely link physical cards to Google Wallet, as well as connect smaller retailers to the system. Elizabeth Grice, a spokeswoman for First Data, said the company already has signed up 1,000 smaller merchants in metro New York City.
The potential is there for eventual widespread adoption, experts said. Other companies like Apple are expect to follow with their own networks.
There are 5 billion cellphones worldwide, only 6 percent are smartphones and fewer still have this NFC technology, said Wayne Johnson, a managing director and transaction processing analyst with Raymond James. Fewer than 10 percent of the 10 million retail outlets have the capacity to do these types of transactions.
The Google system, for instance, will allow retailers to market products and discounts to consumers directly, perhaps in-store.
Today, most retailers know what is purchased, but know little about the buyer. Card companies know how much was spent, but not what a customer’s preferences are.
Companies like Google can sell that data to retailers who use that system.
“This is going to bridge that electronic gap,” Johnson said.
