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Android smart phones to be used for contactless payment

Google could be set to team up with Mastercard and Citigroup to allow contactless payments using Android smart phones.

The Wall Street Journal reports that Google is planning the project in a bid to increase advertising revenue. The payment system would mean Google could give retailers more information about consumers, which could be used to better target ads and special offers. It is understood that Google wouldn't get a cut of any purchases paid for this way.

The system would allow Citigroup card-holders to pay for goods and services using an Android app. They would wave their smart phone close to a special reader to pay for their purchase.

Contactless readers use “near field communication” technology to enable payments. Thousands of retailers already have this technology available to be used with contactless credit and debit cards. The smart phone system is reported to be set to launch later this year.

Nick Holland, a mobile transactions analyst at Yankee Group, told the Wall Street Journal, “Because it's contactless there's a perception people can grab it from thin air, but it's actually a more sophisticated technology than credit cards with a magnetic stripe, making it more difficult to steal a consumer's payment information.”