At an event in New York, Google introduced Google Wallet, a contactless near field communication (NFC) based cell phone payment platform.

The company is teaming up with Citibank, Mastercard, First Data and Sprint along with numerous retailers to roll out the service. It will initially be available in New York City and San Francisco this upcoming summer on a trial basis, solely on the Google Nexus S phone. Google said going forward it has the possibility to be implemented on any NFC enabled phone depending on whether not other operating system providers, hardware companies and carriers are willing to work with them.

Your phone will be your wallet, Google Vice President of Commerce for Stephanie Tilenius declared at the event. Google plans to bring the retail ecosystem from payments, to offers and coupons into a single entity.

Google and its partners spouted off various numbers supporting its claim about the future of wallets. According a study, 60 percent of 18-34 year olds are perfectly comfortable using a mobile phone for payments. Google also said half of smartphones will be NFC enabled by 2014 and the ecommerce industry is set to explode.

Along with introducing Google Wallet, Google introduced Google Offers as well. The platform is used in conjunction with Google Wallet and will be available on that application. It's a Groupon style service which offers localized deals. When a consumer goes to a store, if there's an offer with it, it's automatically factored into their purchase. Users can also go to the web and find coupons and add them to their digital wallet.

During a demonstration with American Eagle, Google's vice president of payments, Osama Bedier, showed how a consumer with an NFC-enabled phone using Google Wallets can buy a pair of shorts with their cell phone. With one single tap of the cell phone on a typical point-of-sale system, the user's credit card is charged, their reward card is swiped and any available offers are factored in.

We're building an open commerce ecosystem that for the first time will make it possible for you to pay with an NFC wallet and redeem consumer promotions all in one tap, while shopping offline.

Google stressed the fact that the Google Wallet service was only the beginning. At commercial launch, three kinds of cards will be able to be used with Google Wallet. Citibank-branded MasterCards, Google Prepaid cards and gift cards. On the prepaid card, users can load money from whatever credit or debit card accounts they want to and it will take it out. Users must have a Google account to sign up.

As part of Google's openness campaign, the third card slot in Google Wallet is a miscellaneous section. Bedier said any kind of gift card or customer loyalty card can be added as well. They also left the future open to more wallet integration.

Someday I hope to bring my entire wallet into the cell phone, Bedier said.

Security, a vital issue for contactless payments on a cell phone, was addressed by Google as well. There is a pin number protecting the phone, similar to a pin on a credit card. Phones like the Nexus S are also embedded with a NXP PN65 chip, which enables a secure platform. The chip, which acts as a transfer agent from the phone to the retail outlet with encrypted consumer data, is only turned on when the wallet is unlocked. The chip also self destructs when someone attempts to take it out.

If a consumer loses their phone and is worried about their pin number getting cracked, Google provides a number to call where the entire Google Wallet system gets deactivated.

Google did not make any specific international launch plans, other than to say it is looking at Europe and Asia. The app itself is free and Google's revenue comes from advertising on its Offers platform.

Follow Gabriel Perna on Twitter at @GabrielSPerna

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