Verizon Wireless Blocks Google Mobile-Payment System on Security Concern

Setback for Google amid intensifying competition between services that let consumers pay with mobile phones

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Citing security concerns, Verizon Wireless, the largest U.S. wireless carrier, blocked Google Inc.'s competing mobile-payment system on the new Galaxy Nexus smartphone.

Verizon Wireless, co-owned by Verizon Communications Inc. (VZ) and Vodafone Group Plc (VOD), is working to have "the best security and user experience," Verizon spokesman Jeffrey Nelson said today in an emailed statement. The carrier, based in Basking Ridge, N.J., will allow the service, called Google Wallet, "when those goals are achieved."

The move is a setback for Google and comes amid intensifying competition between services that let consumers pay for goods with mobile phones. Verizon Wireless and partners AT&T Inc. (T) and T-Mobile USA plan to invest more than $100 million in a joint venture called Isis, which competes with the Google service, people with knowledge of the project said in August.

"The refusal to allow this is probably being used as leverage in negotiations between Verizon and Google over the terms of the contract and the sharing of customer information," David True, a consultant with Broadly Curious Advisors in New York, said today in a telephone interview.

The Galaxy Nexus, made by Samsung Electronics Co.(005930), runs the latest version of Google's Android software and will go on sale this month. It is Verizon Wireless's first Android phone using a near-field communications chip that can transmit payment information to store registers through Google Wallet.

Google and Verizon have had a fruitful relationship when it comes to the internet giant's Android. The carrier was largely responsible for putting that mobile software on the map a few years ago with a marketing major push behind its own brand of Android smartphones, Droid.

"Google Wallet is a secure payment platform that has been designed from the ground up with security as a priority," Nate Tyler, a Google spokesman in Mountain View, Calif., said in a telephone interview.

The Isis venture plans to introduce its service in a few markets next year.

-- Bloomberg News --
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