Google launches trial of tap-to-pay system for smartphones, but obstacles, rivals loom

The Nexus One phone from Google Inc.

NEW YORK — Google wants the smartphone to be the wallet of the future, a container for digital credit cards, coupons, receipts and loyalty cards that can be "tapped" to terminals in stores.

In cooperation with MasterCard and Citibank, Google Inc. is launching a trial of its payment system in San Francisco and New York. It is opening it up to consumers in the summer. It then plans to expand across the country.

The ambitious plan to transform how consumers pay faces several hurdles. The Google Wallet will initially work on only one smartphone, the Google Nexus S carried by Sprint. It will connect only to MasterCard PayPass terminals.

There are more than 135,000 of those in U.S. stores and restaurants, but that's only a small fraction of the total number.