Google’s newest iteration of its Android phone OS will include a wallet that lets you use your phone to make payments by tapping it against a cash register, CEO Eric Schmidt revealed Monday.
“This could eventually replace credit cards,” Schmidt said.
Android 2.3, codenamed Gingerbread, will be released in a “few weeks,” Schmidt said on stage at the Web 2.0 Summit conference in San Francisco. Schmidt showed off how so-called Near Field Communication would work using an unnamed smartphone he called an unannounced product. Using the software from Android and a NFC chip in the phone, Schmidt was able to “check in” to the conference, launching Google Maps, by touching the phone to a conference sign that had a built-in antenna.
(For geeks, there was little doubt Schmidt was showing off the Nexus S, a device thought to be made by Samsung as the successor to the original Nexus One. Unlike most other Android phones sold, the Nexus S will run the stock Android OS with no carrier modifications, making it the perfect phone for app developers and tinkerers.)
Near Field Communication sounds fancy, but it’s the same technology build into debit cards that can be used to make a payment by bumping against a reader at a store or gas pump. Android 2.3 devices that have the right on-board chip will be able to make payments using stored credit card numbers or other payment systems such as PayPal.
While U.S. geeks have long hungered for their phones to take the place of plastic credit cards, the NFC technology is not likely to replace credit card companies. In fact, Schmidt said those companies are excited about Near Field Communication because they think it will reduce fraud.
Despite running its own payment solution called Google Checkout, Google will be aggregating many payment systems, not trying to replace them, according to Schmidt.
“Ultimately, it is a personal, secure and aggregating technology,” Schmidt said.
Schmidt says he’s bullish on mobile and says it will be a core focus for Google.
“I don’t think people figured out how much more powerful the mobile devices would become than desktops,” he said, referring not to their processors, but to their ability to keep a user connected to the net everywhere and use location to customize the net.
Schmidt imagines a future where mobile users who opt in to getting notices and suggestions will have local merchants sending targeted deals their way. Companies with smart algorithms and knowledge of your likes and dislikes (such as Google) can send you suggestions — such as where you might like to go for a coffee, or even remind you that you needed dental floss and there’s a drugstore around the corner having a sale on it.
There’s a lot Google could do with mobile if it knew more about users’ friends and family — their so-called “social graph,” but right now, that data is mostly locked up in Facebook, Schmidt said.
“We think that link structure has great value,” Schmidt said “This kind of information is generally open so that its owners can move it around. I’m worried, as a general statement, that business structures are causing people to keep too much information private.”
“It’s possible to build these businesses using open protocols,” Schmidt said, clearly referring to Facebook’s Open Graph protocol, which data-portability advocates say is more about keeping people tied to Facebook than being open to all comers.
"I have here an unannounced product that I carry around with me," Schmidt said on Monday while pulling a touchscreen smartphone from a jacket pocket during an on-stage chat at a Web 2.0 Summit in San Francisco.
"You will be able to take these mobile devices that will be able to do commerce," he continued. "Essentially, bump for everything and eventually replace credit cards. In the industry it is referred to as tap-and-pay."
The near-field chips store personal data that can be transmitted to readers, say at a shop checkout stand, by tapping a handset on a pad.
Schmidt hid markings that might reveal which company made the mobile phone, and playfully stuck with referring to it only as an unannounced product.
Google worked with Taiwanese electronics titan HTC to make the Nexus One handsets it released in January in a high profile entry into the booming smartphone market.
Nexus One smartphones built on Google's Android platform won raves for their capabilities but weren't a hit with buyers.
In a country where mobile phones are generally tied to specific wireless carriers - Apple iPhones with AT&T, for example - Google took a novel approach by selling the Nexus One without ties to, or subsidies from, any carriers.
Google eventually abandoned selling Nexus One handsets only online, switching to marketing the smartphones in real-world stores.
"I don't think people understand how powerful these things are," Schmidt said of smartphones. "This is a really good day for mobile."
Secure chips in handsets thwart fraud better than credit cards, he contended.
Google will rely on an online payments processor to handle the mechanics of purchases made using the chips in the new phones.
A tap-and-pay component should complement increasingly common location-based features that let merchants alert smartphone users to bargains available at nearby shops.
"I said there would never be a Nexus 2," Schmidt quipped. "Nothing about a Nexus S."
Google has been dipping into its war chest to buy technology startups seen as "gems" and to attract and retain talented workers.
Google recently gave pay raises to all of its employees worldwide, according to Schmidt.
"This is a war for talent," he said of the move. "It was a very nice day when everybody got raises."
When asked about the thrashing Google took in an array of countries after "Street View" imaging vehicles collected private data from wireless networks, Schmidt said the firm was conforming to standards in different regions.
"We learned with Street View and all of these things that you can't rush these products out," Schmidt said.
"The fact is that society is going to have to confront all sorts of uncomfortable questions ... as technology moves forward."
Some lines should not be crossed, such as building face-recognition or real-time tracking technology into services such as Street View, he noted.
Schmidt expected television studios to warm to Google TV, an offering that combines the internet and standard television programming.
"The industry concern seems to be that we are taking a dumb television and making it smart," Schmidt said of the effort to get studios to route content to sets equipped with Google TV.
"The concern is this enormous revenue stream to dumb TVs will be routed to the Internet. I think that is wrong. I think people will watch more television."
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