Rivals likely to reach for Google’s ‘Wallet’

With the announcement of Google Wallet, the internet giant became the first player to dash into a future where people use smartphones as credit cards, but rivals are expected to cut its lead short.

EBay quickly threw up a hurdle in the form of a lawsuit accusing Google of building the mobile payments platform with trade secrets swiped from the online auction titan’s PayPal financial transactions unit.

Apple, Amazon.com, eBay and Facebook are each believed to be working on ways to let people use smartphones to pay for items or services but Google was the first to introduce such a system, in the form of Google Wallet.

At this point, the move is largely symbolic. A test version of the system will go to live in coming months in just two US cities, New York and San Francisco.

Google Wallet will work with Android-powered phones like Google’s Nexus S equipped with near-field-communication chips, serviced by US telecom Sprint and only at merchants that have partnered with Google for the launch.

Google partners on the mobile payment platform include major chains such as Macy’s, Subway sandwiches and American Eagle Outfitters clothing shops.

“Google Wallet has big ambitions but also faces great obstacles, but (its operating system for mobile) Android and location-based search are key assets that could help launch the ecosystem,” Justin Post, financial analyst at Bank of America Merrill Lynch said.

Within hours of the unveiling of Wallet , eBay and PayPal filed a lawsuit charging that Google tapped into the online financial transaction service’s know-how for the mobile payments project.