Yesterday news broke that Google (NASDAQ:GOOG) is preparing to make an announcement to show off its new “pay-phone” technology, which will allow customers to pay by flashing their phones in front of checkout registers instead of having to use credit or debit cards. The new technology, which will be initially available only on Google Nexus S phones, has already been organized through exchanges with Citibank (NYSE:C) and MasterCard (NYSE:MA) and will treat registered phones as “virtual prepaid cards.” The system will allow users to pay with their phones at any of the existing 124,000 MasterCard PayPass terminals. Major retailers American Eagle (NYSE:AEO), Macy’s (NYSE:M) and fast-food staple Subway have already agreed to make upgrades that will ready them for participation in the program. Google plans incentivize use of its novel “near-field technology” by offering “loyalty points,” coupon discounts, and other rewards to early users.
The official announcement from Google (NASDAQ:GOOG) is expected to come tomorrow morning, when details of the program will be made public and more information will be provided on the nature of the technology, as well as how much the customer will be able to use it for.
Not to be outdone, this morning we learned that Bank of America Corp. (NYSE:BAC) , Wells Fargo & Co. (NYSE:WFC) and J.P. Morgan Chase & Co. (NYSE:JPM) are also collaborating to fine tune a new method of mobile payment services. The three banks are reportedly looking into creating a system that would allow people to “use checking accounts to send money with an email address or phone number.” This news also comes on the heels of recent innovations by PayPal that allow for money transfers using the Apple’s (NASDAQ:AAPL) iPhone.
The race for developing and releasing mobile payment systems is loaded with profit incentives. The first companies to implement a stable and reliable system will have a great advantage in being able to attract the first wave of customers that put the new tech to use. The potential for expanding the capacity of mobile pay technology, and encompassing a broader range of goods and services as exchangeable through mobile transaction represents a mouth-watering and novel customer base for these companies. Expect some dirty business, aggressive marketing, and awesome new innovation to emerge from this competition.