Google Inc. unveiled two services to let consumers pay merchants and download coupons with a tap of their mobile phones, as the Internet search giant seeks to expand in the growing market for mobile advertising.
Google is partnering with Mastercard Inc. and Sprint Nextel Corp. to let customers pay and receive coupons on the go using their handsets, the company said today at an event in New York. The system, based on a technology called near field communication, will be available first on the Nexus S handset, which uses Google’s Android software, and later on other phones.
The new services will help Google compete for retail-marketing dollars that now flow to daily deal sites such as Groupon Inc., in-store display advertisers, business directories and newspapers. They will also help the company capture more information about consumers’ shopping behavior off the Internet, building on its knowledge of consumers’ online-buying habits.
“For Google, it is about advertising and enabling commerce,” said Chetan Sharma, an independent wireless analyst in Issaquah, Washington. “Google wants to become the personal concierge for the consumers.” More than 96 percent of Google’s $29.3 billion in sales last year came from search advertising.
Google said it expects to receive revenue from delivering ads and offers to handsets, and won’t make money off of payments. The payment service, called Google Wallet, and the related Google Offers service will be free to consumers.
Google, based in Mountain View, California, fell $1.54 to $518.13 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have lost 13 percent this year. NXP Semiconductor NV, the provider of NFC chips for the Nexus S, added $1.33 to $28.55. Mastercard rose $7.62 to $282.10 on the New York Stock Exchange.
Google Wallet will be available in San Francisco and New York this summer. Google Offers, integrated with the Google Wallet and offering coupons and discounts, will be available in the same markets, and also in Portland, Oregon.
“It won’t be a long trial,” Fared Adib, a senior vice president at Sprint, said in an interview. “You trial things when they are nearly done and ready to go out.”
Sprint said most of its phones will have NFC technology eventually. Stephanie Tilenius, a Google executive, said 50 percent of phones sold in the U.S. will have NFC by 2014.
Other Google partners include First Data Corp. and Citigroup Inc.
New York, San Francisco
Google is teaming up with retailers including fast-food chain Subway Restaurants, Macy’s Inc., and American Eagle Outfitters Inc. to let customers pay for products and redeem coupons with their phones. The services will work at retailers with terminals that accept Mastercard PayPass transactions.
Many merchants’ existing cash registers will have to be updated to work with the services. That could mean extra business for payment-systems providers like VeriFone Systems Inc. Douglas Bergeron, Verifone’s chief executive officer, said broad adoption of mobile-wallet services like Google’s could add $100 million to $150 million to his company’s annual revenue.
“We are in the wallets business now,” Bergeron said in an interview.
Users of Google Offers will be able to download coupons by tapping their NFC-equipped phones on display ads, and the service will guide them to the nearest retailer where they can be redeemed.
“The most immediate impact will be felt in retail, but then can spread across every consumer-facing enterprise that accepts on-premise payments -- travel, entertainment,” Sharma said.
U.S. mobile-coupon spending may rise to $6.53 billion in 2014 from $370 million in 2010, according to Borrell Associates Inc. The wallet may eventually include users’ drivers’ licenses, concert tickets and hotel room keys, Tilenius said.
The new services also may accelerate consumer adoption of Google’s Android operating system, Sharma said. The software was used in 36 percent of smartphones shipped globally in the first quarter, according to research firm Gartner Inc. That made Android No. 1 ahead of Nokia Oyj’s Symbian and Apple Inc.’s iOS.
Apple also plans to introduce NFC features in its iPhone and iPad tablet, Richard Doherty, director of consulting firm Envisioneering Group., said in January. Nokia and its software partner Microsoft Corp. are working on NFC functionality, too.
In the U.S., Google kick-started adoption of NFC features last fall, with a service called Hotpot in Portland, Oregon. Vendors such as Voodoo Doughnut have put special tags on their doors that can be tapped with an enabled phone to give users access to reviews, menus and directions.
Users of Google Wallet will be able to use any credit card to deposit money onto a digital Google prepaid card contained within their phones. Credit-card networks hope mobile wallets like Google’s will help them boost revenue.
“This is part of a broader strategy that Mastercard has been working on to use mobile phones as a platform to displace cash and checks around the world,” said Chris McWilton, president of U.S. markets for Mastercard. “Mastercard believes an open system, at the end of the day, is the way to make mobile payments ubiquitous around the world.”
In NFC-based mobile payments and marketing services, Google will square off against wireless carriers, other handset makers and financial institutions like Visa Inc. that are promoting their own mobile wallets and discount offers.
ISIS, a joint venture of AT&T Inc., Verizon Wireless and T-Mobile USA, plans to introduce a similar service in two cities, including Salt Lake City, in early 2012.