Google to show off mobile wallet for Android phones
Google is set to introduce a mobile payments platform that will turn its Android smartphones into a digital wallet.
At an event in New York on Thursday, the tech giant is expected to show off the technology, called near field communication or NFC.
The technology allows devices to "talk" to one another wirelessly.
Consumers wave their phones in front of a reader at a checkout to pay for a purchase or to receive special offers.
The Wall Street Journal has reported that the program will initially be launched in New York and San Francisco before being extended more widely across the US.
Retailers who are said to be taking part include department store Macy's, American Eagle Outfitters and Subway fast-food chain.
While Google has made no comment on the reports, it has sent out invitations to the press asking them to attend an event at its New York offices where it will show off its "latest innovations".
Mobile network operator Sprint is also expected to take part.
In January Google chairman Eric Schmidt wrote in a guest edition of the Harvard Business Review that mobile money was a key part of Google's strategy for 2011.
"Phones, as we know, are used as banks in many poorer parts of the world - and modern technology means that their use as financial tools can go much further than that," said Mr Schmidt.
Research firm Forrester has said it expects 40-50 million NFC-equipped phones to be sold in 2011.
Apple is reportedly planning to include the technology in its upcoming iPhone 5 which is expected to be unveiled at its developer conference next month.
Microsoft is also said to be making plans to incorporate NFC in future Windows phones, as is Blackberry maker RIM.
Samsung and Visa have said they will facilitate mobile payments via NFC on smartphones during the summer Olympics in London next year.
"Google's Nexus S device that it recently announced is the first Android-powered device supporting NFC and we expect NFC is going to increasingly become a default feature of every smartphone that is sold over the next couple of years," Charles Govlin, principal analyst at Forrester, told BBC News.
Market researcher Gartner said with the total value of mobile transactions reaching $245bn in 2014, demand for mobile wallet services would be huge.
But not everyone is convinced that contactless payments using a phone will replace cash.
"In my view, while I think it is clear that potentially these phone-based transactions will be widespread, it will happen slowly, one reason being that consumer behaviour changes very slowly," said Mr Golvin.
"The big beneficiary here will be Google, a company that is all about information. The metadata involved in such transactions could allow Google to serve ads and make you a more valuable target for advertisers," he added.
Last week the first NFC service was announced in the United Kingdom involving Orange and Barclaycard.
Mobile wallet services have been available in Japan for a number of years.