Report: Google ready for cell phone payment test

Google Inc. plans to start testing a mobile-payment service at stores in New York and San Francisco within four months, letting shoppers use their phones to ring up purchases, two people familiar with the project said.

The company will pay for installation of thousands of special cash-register systems from VeriFone Systems Inc. at merchant locations, said one of the people, who requested anonymity because Google's plans haven't been made public. The registers would accept payments from mobile phones equipped with so-called near-field-communication technology.

The project would put Google in a growing field of companies experimenting with NFC, which lets consumers pay for products and services by tapping a device against a register at checkout, giving them an alternative to cash or physical credit cards. The Google service may combine a consumer's financial account information, gift-card balances, store loyalty cards and coupon subscriptions on a single NFC chip on a phone.

Randall Sarafa, a spokesman for Mountain View, California- based Google, and Lindsay Durfee, a spokeswoman for VeriFone in San Jose, California, declined to comment.

Google, the world's largest Internet search company, has used its Android operating system to take a leading role in the smartphone industry. The company offers Android for free to phone manufacturers, aiming to boost revenue from services such as mobile advertising and expand the market for its search engine. Google's software leads the market for smartphone operating systems, according to research firm Canalys.

Google's mobile-payment service would face competition from EBay Inc.'s PayPal and ISIS, a joint effort of several mobile companies. The ISIS system, backed by AT&T and Verizon Wireless, will rely on Riverwoods-based Discover Financial Services to handle the payments.

The adoption of NFC payment systems will hinge on the availability of phones with the technology. Samsung Electronics Co.'s Nexus S phone already allows for NFC transactions, while Nokia Oyj and Research In Motion Ltd. have vowed to bring NFC- enabled phones to market.

Google dropped $6.72, or 1.2 percent, to $569.99 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have declined 4 percent this year.