Google faced a lawsuit yesterday hours after it unveiled a free mobile application that turns a smartphone into an electronic wallet and is designed to replace plastic credit cards.
PayPal and eBay filed a lawsuit in a California state court on Thursday charging that the Internet giant tapped into trade secrets for its newly released Google Wallet. Google did not immediately respond to the allegations.
PayPal spent three years trying to work out a deal in which it would handle payments for Android smartphones, only to see Google scuttle the talks and hire its lead negotiator Osama Bedier, according to court documents.
Bedier worked at the eBay-owned online financial services unit as a vice president of platform, mobile and new ventures until being hired in January by Google.
He played a central role at Google’s official unveiling in New York with financial partners Citibank, MasterCard and First Data and telecom ally Sprint, saying Google Wallet is being field tested and will be available this summer.
Google Wallet will initially work with Google’s Nexus S 4G smartphone from Sprint, the third-largest US wireless provider, and will eventually be expanded to other phones equipped with near field communication (NFC) technology.
An NFC chip in a phone allows a user who has entered his or her credit card details to “tap-and-pay” for purchases at a checkout register equipped with the PayPass system from CitiMasterCard.
Customers can also use a Google Prepaid card to pay for purchases and take advantage of Google Offers, the Mountain View, California-based company’s online discount coupon program.
The company said Google Wallet will be accepted at more than 124,000 US merchants at launch and more than 311,000 around the world.
Stephanie Tilenius, Google’s vice president for commerce and payments, described Google -Wallet as the “next generation of mobile commerce.”
“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,” Tilenius said. “We are looking at expanding internationally, Europe first and then Asia.”
The PayPal lawsuit contends that Tilenius helped Google poach Bedier and named both executives and the Internet company as defendants in a civil case alleging misappropriation of trade secrets.
Mobile payments are being tested or used in a number of countries already, notably France and Japan, but Google Wallet will be among the first to bring NFC technology to stores in the US.
Google said it has built a number of security systems into Google Wallet, including the need for a PIN number and credit card encryption. If lost, the payment system can be disabled with a phone call.
In addition to allowing for mobile payments, Google Wallet lets consumers pay using gift cards and redeem promotions such as discounts or coupons.