Google faces a trial, just few hours after the launch of a free application designed to replace the classic credit cards and which turns a smartphone into an "electronic wallet".

In the trial issued against Google in a Californian Court, the company was accused of using PayPal and eBay’s technology for the newly launched Google Wallet application. Google officials did not comment on these allegations.

In the document filed in court states that PayPal specialists working for about three years at a technology that allows payments using smartphones with operating system and that the people at Google have mastered the technology illegally, hiring the Head of the project, Osama Bedier.

Bedier has worked in online financial services unit owned by eBay as the Vice-President of the mobile platform until he was hired (in January) by Google. He played an important role at the official launch of Google Wallet, which took place Thursday in New York, during which he stated that the service is being tested and will be available this summer.

What is Google Wallet?

Google Wallet will be available initially only for Google Nexus S 4G terminals from Sprint and will be extended later to other phones equipped with Near Field Communication (NFC).

The NFC chip embedded in mobile device allows a user, who previously entered his bank card details, to use his terminal to make purchases via the PayPass payment systems from Citi MasterCard.

Customers can also use a Google prepaid card to pay for purchases, benefiting from Google Offers advantages – the online system of coupons of the American company, which claims that Google Wallet will be accepted by more than 124,000 U.S. merchants and more than 311,000 worldwide.

The application will require a PIN for each transaction. Payment credentials will be encrypted and stored on a chip, the safety feature of the phone. The application itself will be free for the users.

Stephanie Tilenius, Vice-President for Trade and Payments Division at Google, describes Google Wallet as "the next generation of mobile commerce”: “We are building an opened trading ecosystem that will bring, in premiere, the opportunity to pay with a NFC wallet and to announce the consumers all promotions – all of them with just a touch, while the user will make his shopping offline," said Tilenius, who added that the system will first expand in Europe and then Asia.

Who and what betrayed

PayPal says that Tilenius (who was also an employee of eBay, from 2001 until October 2009 as a consultant) helped Bedier’s recruitment by Google and quoted both company’s executives as defendants in a civil lawsuit based on the misuse of trading secrets.

Bedier was accused that he would revealed Google certain secrets on PayPal projects. PayPal and Google have collaborated over the past three years to establish a technology developed on the PayPal platform that would serve as payment option using the mobile apps from the Android smartphones.

NFC – the future wallet

Mobile payments are already tested and used by several countries, notably France and Japan, but Google Wallet is the first service that brings NFC in U.S. stores. NFC technology uses short-range wireless communications action to allow the exchange of encrypted information between devices at short distance.

Three of the largest providers of mobile communications in the U.S. – AT & T, T-Mobile and Verizon Wireless – have announced in November 2010 that have joined forces to establish a national network called "Isis" to allow the payments via mobile phones, the service being introduced in the next 18 months. Google executive, Eric Schmidt, said shortly before the launch of the Nexus S, in December 2010, that the NFC technology it’s expected to take the place of the classic credit cards.

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