Is Google poised to take over NFC-based mobile payments?

Recent reports that Google is developing its own NFC-based solution for using smartphones as an e-wallet.

I’ve talked about NFC as a mobile payment system (among other possible applications of the technology) before. The idea is an appealing one. Link your NFC-enabled mobile phone to your choice of credit/debit card(s) and/or bank account(s). Simply wave your phone to make purchases with your chosen account(s). The idea makes carrying cash and your entire wallet (with the possible exception of a photo ID) obsolete. After all, NFC could handle any form of payment from groceries to your daily metro or subway commute.

Several companies and banks have conducted small tests of NFC. These have been largely limited geographically. They have also focused on banking and a few select merchants (though one NFC test did include New York’s Metro Transit Authority and select subway stations).

The big problem is that, as of now, there is no single standard. There isn’t even a handful of preliminary standards. That makes widespread NFC payment adoption almost impossible, but it also gives companies an opportunity to develop competing solutions. Eventually the best two or three solutions should gain enough critical mass to be standardized.

Google seems to have its sights set on becoming one of those few standards. According to recent reports, the company is developing its own NFC payment solution. It will enter a market that may include solutions from Paypal and Apple.

Google seems like an odd pioneer for mobile payments. Paypal, with its global influence as an Internet payment solution and its recent mobile feature additions, which make it an alternative to traditional banking, seems like a much more logical frontrunner.

On the other hand, Google does have a lot of clout when it comes to NFC because the recent launch of the Nexus S and Gingerbread (the most recent Android release) offer the first truly widespread smartphone/NFC integration. That could give Google significant bargaining power. It also makes a certain sense to expect Google to try to lead in this area when you consider that the company is hyping mobile search and recommendation features (on Android and other mobile platforms). By promoting a payment solution along those lines, Google could easily encourage businesses and users to rely more on its mobile offerings and mobile ads along with any cut of the transactions that the company may take.

As I’ve said before, its still very early in the NFC ballgame and making predictions about how the technology will be used and which companies will dominate the it is virtually impossible. That said, Google is already pioneering the use of NFC for disseminating information to mobile consumers. Adding one of the first widespread mobile payment solutions could easily give Google a leg up over many other companies. Whether that will let Google dominate the NFC landscape or not, however, remains to be seen.

Ryan Faas writes about personal technology for ITworld. Learn more about Faas' published works and training and consulting services at www.ryanfaas.com. Follow him on Twitter @ryanfaas.

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