May 27, 2011

Google unveils smartphone pay service, PayPal sues - Boston.com

NEW YORK (AP) — Google Inc. hopes to nudge consumers and merchants into a world where the smartphone has replaced the wallet as the container for credit cards, coupons and receipts. While it tackles that challenge, Google also will have to spar with the biggest online payment service, eBay Inc.'s PayPal, in a legal battle that could be filled with corporate intrigue. After Google unveiled its tap-to-pay technology in New York on a smartphone equipped with its Android software, PayPal struck back in a California court with a lawsuit alleging the service is the byproduct of intellectual theft and betrayal. "Sometimes the behaviors of people and competitors make legal action the only meaningful way for a company to protect one of its most valuable assets — its trade secrets," PayPal wrote on its blog Thursday. In Google's vision detailed Thursday, shoppers will touch their phone screen to select a card, then tap the phone to a credit-card reader in a store or restaurant. The Internet search and advertising company also faces tough competition from cellphone companies and payment card issuer Visa Inc. All of them want to play the central role of tying together phones, retailers and banks into a new payment system. Google views its digital wallet as a way to sell advertising at a pivotal moment: when shoppers are in stores, ready to spend money and even more receptive to coupons and other discount offers. Google calls Wallet a "single-tap solution," but in a demonstration Thursday at Google's New York office, a Google executive had to tap his phone twice to a terminal provided by retail partner American Eagle Outfitters Inc., then sign on the screen to get a purchase of a pair of denim shorts through.