Google Inc.'s interest in near field communication technology, which it is testing in a payment trial, might be more about advertising than establishing its own payments network.
"NFC for Google is a means to really extend their current business practices and bring Internet advertising into the physical world," Nick Holland, a senior analyst with Yankee Group, said. "For Google, the bigger picture would be maybe offering promotions at the point of sale."
Holland's observation follows a Bloomberg News report that Google is preparing to launch an NFC trial in San Francisco and New York this summer. The test would call for the Mountain View, Calif., company to pay for and install thousands of contactless readers from VeriFone Systems Inc. at merchant locations. The article cites two anonymous sources.
"We're not commenting on rumor and speculation," Nate Tyler, a Google spokesman, said. VeriFone also declined to comment.
The Bloomberg article came a day after a London newspaper reported that Apple Inc. would not be including NFC chips in the next version of the iPhone.
Google no doubt is experimenting with NFC on some level, Holland said.
Nexus S, a smartphone made by Samsung Electronics Ltd. device that runs on Google's Android operating system, has NFC embedded in it, but the chip is not active. The most current Android update supports NFC functions, Holland said.
Google in December purchased a Canadian startup named Zetawire Inc., which has filed a patent application for a mobile-payment system.
Google also has a program called HotPot, which enables consumers to rate and review merchants such as restaurants and share their reactions with friends. HotPot is similar to the social networking website Yelp Inc.
Holland said he believes Google will somehow mesh NFC and HotPot. If Google's plan to outfit merchants with contactless readers is true, it might be an effort to collect consumers' purchase histories and develop advertisements and promotions based on such data, he said.
"That would be an area they'll be interested in more than others," Holland said.
Payments still would be part of Google's NFC plans, just through a third-party, Holland said. "If they are looking to provide some kind of payment vehicle here, it's probably going to be around a direct connection back to traditional payment mechanisms like Visa, MasterCard or even PayPal," he said.
Google could generate revenue from NFC much in the same way it does online and "get a cut of the revenue pertaining to advertising working at merchant locations," Holland said.
"In this instance, Google would receive the click from the tap of a phone instead of a mouse," he said.
