Google faced a lawsuit on Friday hours after it unveiled a free mobile application that turns a smartphone into an electronic wallet and is designed to replace plastic credit cards.
The 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 buys and take advantage of Google Offers online discount coupon programme.
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 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 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.
The Google Wallet will be accepted at more than 124,000 US merchants at launch and more than 311,000 around the world.