Not too long ago, we took a big-picture look at the emerging market for mobile payments, with a focus on near-field communications activity. We listed the key players--telcos, big banks, PayPal, card networks, Apple and start-ups. But we neglected to mention Google, which may be poised to make the biggest splash of all. 

The Internet giant has quietly been working on an NFC solution that exploded into headlines last week. It has teamed up with Citigroup, MasterCard and VeriFone to launch a pilot system that just might put it in the pole position as NFC chip sets slowly become standard in smartphones. So far, the Nexus S is the only Android phone that sports this chip set, but others are on the way. 

The project, which is in its early stages, will allow people to use Citigroup-issued debit and credit cards to make payments via an application developed for Android phones. The pilot system may be up and running later this year. New York and San Francisco will likely be first--within the four months. Los Angeles, Chicago and Washington D.C. may follow soon after. Wal-Mart is rumored to be one participating retailer. 

One selling point is that Google will not take a cut of the transaction. Instead, it will stick to its advertising model, prodding local merchants to buy ad space. In addition, Google will pay for the installation of thousands of VeriFone NFC terminals. Clearly, Google will make it as seamless and inexpensive as possible for pilot participants. You would expect Google to also invest in security matters and tout some of the added security that comes with NFC. 

The merchant community is in favor of new solutions. It has long chafed at the interchange fees and rules that seemed to be stacked against it. The Durbin Amendment, which in theory will slash interchange fees on debit card swipes, is still under attack by critics. And some fear it will be delayed. So far, it's unclear if NFC will affect such fees, though we may hear opponents of the amendment argue that technology has the power to reduce those fees without legislation. 

In the end, Google may seek a revenue model that shaves merchant fees, which would be a big selling point, and delivers value back via the local advertising. As Groupon has shown, this can have a powerful effect. 

So, you can add this pilot to the many others that have drawn much attention. ISIS, a joint venture that includes AT&T, Verizon Communications, T-Mobile USA and Discover, has garnered the most attention. Visa also has some pilots in place, as do Bank of America and other big banks. 

It's hard to interpret every twist and turn of the tea leaves, but the activity is exciting. Microsoft will soon add NFC support to its mobile software, while Apple is said to have delayed NFC support for the upcoming iPhone 5. 

The stakes are rising--for banks, too. As card issuers, they will benefit from the trend toward NFC, but will they lead the revolution? Or will they be relegated to technology followers in an area where the real value in the process is dictated by other firms? - Jim