Reports that Google Inc. will introduce a mobile payment system today are being welcomed by many, and industry experts believe the move could bolster the mobile payment space overall.

The mobile industry has been talking for several years about the power of being able to purchase items with a mobile phone using near field communication chips embedded in the device. While the possibility of such activity has been hampered by a lack of NFC-enabled phones in the market and confusion over who would benefit financially from this, the fact that a company as big as Google is getting behind mobile payments speaks to the growing consensus that mobile payments are coming.

“This is definitely a step in the right direction and I believe it is a major step forward,” said Jagdish Rebello, senior director and principal analyst of communications and consumer electronics at IHS iSuppli, El Segundo, CA.

Google and Apple have both been rumored to be readying mobile payment solutions.

A report in the New York Times yesterday cited a source familiar with the situation as saying that that Google will unveil a system that lets consumers pay at checkout with phones operating on the Android system.

“I think they are trying to steal a march on Apple and get out there a bit sooner,” said Drew Sievers, cofounder/CEO of mFoundry, Larkspur, CA.

Google will work with MasterCard Inc. to launch the system and has already signed up retailers such as Macy’s Inc., American Eagle Outfitters Inc. and Subway, according to reports.

Google declined to comment for this story.

Ecosystem growing
“It involves two complementary marketing coming together and trying to develop a solution that addresses a market need,” Mr. Rebello said. “In doing so, the solution adds legitimacy to the technology and provides an impetus to the establishment of a mobile payment ecosystem.”

The reports, however, describe a mobile payment solution that is fairly limited in scope, is offered on only one handset model and is acceptable at only a limited number of retail outlets.

Mr. Rebello also pointed out that consumers are likely to have to get a new credit card number from MasterCard and buy a Google handset to use the solution.

Despite the service’s limitations, however, it is still a step in the right direction.

“The solution essentially provides a commercial trial of the technology and is a good first step,” Mr. Rebello said.

“In the end, to make this a truly viable solution, Google and MasterCard will have to work with a number of handset vendors offering Android based devices and a number of financial institutions offering MasterCard credit cards,” he said.

Search heritage a benefit
Google’s overall strength in linking people searching for something to the companies offering a relevant product or service is likely to be where the news will affect marketers the most.

“If they make the play around loyalty, offers and providing retailers with deeper insights into the consumer, then they have something,” mFoudry’s Mr. Sievers said.

Tying in complementary products at a store or coupons related to a user’s purchase via mobile is also possible.

However, marketers need to be careful about the privacy issues as they try to harness NFC technology to implement loyalty programs and other programs.

“Those that do it well – being sensitive to consumer privacy needs, provide adequate levels of security – will be well positioned to reap the benefits of NFC,” IHS iSuppli’s Mr. Rebello said.

Google’s move into mobile payments is likely to compete directly with other options out there currently from ISIS, banks and others.

This could hinder adoption.

“I think the consumer is likely to be highly confused in all of this,” Mr. Sievers said. “That level of confusion is going to be a challenge to getting mobile payments adopted.”

However, Google, with its ability to link searches with offers, could be one of the winners.

“The fact that everybody is out there with something will benefit the big players,” Mr. Sievers said.