Phones tapped to become Google wallets

Google Wallet, an app that allows people to pay for goods by tapping their mobile phones near special receivers, was publicly demonstrated in New York City Thursday.

Google has partnered with Citi, MasterCard, First Data and Sprint to create the app, which will allow people to store credit cards, coupons, loyalty cards and gift cards "but without the bulk," the company said in a blog post Thursday.

It is being tested and will be released "soon," Google said.

To begin with, the only phone the app can be used with is Google's and Samsung's Nexus S on the Sprint network in the U.S. The only credit card it can be used with is the Citi MasterCard.

Users will be able to pay by tapping their phone against receivers for PayPass — the existing system that allows MasterCard users to pay by tapping their credit cards against a receiver, without waiting for and signing a receipt.

Users will also be able to pay using a Google Prepaid Card, which can be funded from payment cards other than Citi MasterCard.

The wallet will sync with Google Offers, a new Google service similar to Groupon, which offers online coupons for deep discounts on restaurants, shops and services. It is being beta tested in Portland, Ore.

Google said it is building an "open commerce system" and is developing tools that will let other merchants integrate their offers and loyalty programs.

Visa announced earlier in May that it is launching a new "digital wallet" this fall in the U.S. and Canada that will make it possible for consumers to pay with any of their credit or debit cards using a single click or a tap of their cellphone and a single password.