Though Google Inc. has yet to deliver on a true near-field communication payment phone, it is rumored to be working with key players on the acceptance side.
Over the past month, reports have surfaced that Google is working on mobile payment trials with the terminal makers Ingenico SA, VeriFone Systems Inc., or both.
Samsung Electronics Ltd. in December announced a smartphone, the Nexus S, that runs Google's Android software and has a built-in NFC chip. However, the chip in the Nexus S is read-only, whereas payments typically require two-way signals.
For its mobile payment efforts "to be highly successful, Google will need to make NFC-capable terminals as ubiquitous as possible in its trial markets," said Beth Robertson, the director of payments research at Javelin Strategy and Research.
"This demands a large number of terminals, probably made available at a lower price point than is typical. An additional source — or sources — of terminals can spread the terminal cost and distribution burden," Robertson said.
Google, VeriFone and Ingenico would not comment on their rumored partnerships.
Whether Google is working with one or both terminal makers, it could be testing which technology works best for merchants and consumers, analysts said.
The Ingenico report first appeared Thursday in Les Echos, a French financial newspaper.
Robertson said that for its strategy to be successful, Google needs to enlist a number of acquirers to distribute the discounted or free terminals.
"That could be helpful in reaching out and identifying a lot of merchants," she said.
"It's hard to say" how many terminals would be needed, Robertson said. "Trials like this have generally been done in very small local markets, or they have been done in certain segments of the market, like rapid transit or certain participating merchants. In this case, what it sounds like what they want to do is make them available to everyone. That means they really need to embed with as many merchants as possible."
Nick Holland, a senior analyst at Yankee Group, said any mobile payments efforts on Google's part will likely serve its massive advertising business.
"I think Google is going to stick to what they do best, which is providing very targeted advertising," Holland said. "It's something you can sell on."
If a consumer makes a payment with a Google phone after receiving an ad through Google, "it's evidence that advertising that the merchant has spent with Google is paying out."
Wedbush Securities analyst Gil B. Luria said a deal with Google could help Ingenico expand in the U.S. against rivals such as VeriFone.
"It's very important they are part of this because VeriFone has two-thirds share in the U.S., and Ingenico wants to gain share here," Luria said.
Such a pact could also help Google make up ground against PayPal Inc., a unit of eBay Inc.
"Playing with a company like Ingenico … gives them the ability to penetrate as many markets as PayPal does," said Brian Riley, a research director in the bank cards practice at TowerGroup. "Google can easily get into a debit card the same way PayPal does, now, and so it's exciting because there has been very little really solid stuff out."
Though VeriFone would not comment specifically on the Google rumors, a spokesman said in an e-mail that its terminals, which are installed in 60% of U.S. retail locations, are designed to be easily updated to work with new technology.
