Google partners with MasterCard, Citigroup for NFC debut

Google has sealed a deal with MasterCard and Citigroup to test out its Near Field Communication (NFC) technology.

Google’s Nexus S smartphone debuted with an Android 2.3 aka Gingerbread OS that supports NFC and fueled talks of Google’s mobile payment system.

NFC is a high-frequency, short-range wireless communication technology that enables exchange of data between devices in a secure mode. DWS readers will recall that we were expecting Google to roll out NFC services by mid-2011.

Photo: Nexus S supports NFC mobile payments

An NFC-enabled smartphone can perform a financial transaction just by being waved at a cash register that is not more than 4 inches away from the phone.

The smartphone will be able to send and receive data with the cash register, so it might tell the register just who bought what and when and how much the item costs, etc.

With the new deal, Android 2.3 users will be able to make payments through their credit/debit cards issued by Citigroup and MasterCard. This way Google’s partners will have more data about their NFC customers to give them specialized deals and discounts.

Also under the new partnership, VeriFone – the company that makes credit card readers – will manufacture new “contact-less” NFC devices so that people can make payments just by tapping their phone on the device. Suggested read: OliveSmart Android 2.3 phone in India

Google apparently won’t get its revenue from the transactions done through this system. Instead, by tracking people’s spending habits, it will send appropriate ads to get its cut. Also see: HTC Gingerbread phone coming

Eric Schmidt, the chief executive of Google said at the Web 2.0 Summit in November 2010 that NFC will eventually replace credit cards altogether. It is interesting to note that two NFC-enabled smartphones can also send and receive money from one another.

Mobile payment transactions are set to amount to more than $1 trillion by 2014, according to IE Market Research, and Google will push for the implementation and use of NFC over the coming year. Must read: Cheap and best Android phones in India

ISuppli, a consulting firm in California, says that global shipments of NFC phones will rise to 220 million units in 2014, from about 53 million units in 2010.