Google reportedly testing phone payments in NYC, San Francisco

Google is trying to beat Apple to the punch when it comes to making Near Field Communication (NFC) technology popular in the US. The company is about to begin testing out mobile NFC payments, according to sources speaking to Bloomberg, and plans to do so by installing "thousands" of VeriFone NFC readers at merchants in New York and San Francisco.

For those unfamiliar with NFC, the technology is mostly known in the US as a means of enabling wireless payments at retail stores. NFC is an evolution of the RFID technology employed in "contactless" payment systems such as MasterCard PayPass and Visa payWave, but it's also compatible with the FeliCa system used widely in Asia for mobile payments and ticketing systems. (Check out our NFC technology primer for more details on how it works.)

Google's test "may combine a consumer’s financial account information, gift-card balances, store loyalty cards and coupon subscriptions on a single NFC chip on a phone," according to Bloomberg's sources. The test is expected to begin within four months, though neither Google nor VeriFone have publicly confirmed the testing plan.

Even without confirmation, the fact that Google is moving forward with NFC tests is no huge surprise. Android 2.3 (Gingerbread) currently offers NFC support, and there's at least one Android phone (the Nexus S) that sports the required hardware. It makes sense that Google would begin testing the feature in hopes that the technology will take off, though it will eventually need more hardware makers to jump on board in order to be successful.

Apple is also expected to add NFC technology to a future version of the iPhone, and possibly even the iPad. Rumors from January said Apple might even roll out NFC-compatible iDevices later this year, but more recentrumors say otherwise. According to sources at "several of the largest mobile operators in the UK," Apple has said that it won't implement NFC just yet because of a "lack of clear standards across the industry." Despite this, Apple is still supposedly working on its own NFC implementation that would allow users to make payments through their iTunes accounts.

Like Google, Apple is believed to be heavily subsidizing iPhone-compatible NFC terminals in order to get small businesses on board. From the sound of it, though, Google is a few steps ahead of Apple—we wouldn't be surprised to hear more about Google's NFC tests once they get off the ground, and possibly even expand to other cities.