NEW YORK (

TheStreet

) --

Google

(GOOG) - Get Report

is paving its own path in mobile payments.

With wireless phone giants

Verizon

(VZ) - Get Report

and

AT&T

(T) - Get Report

already planning a store payment service called

Isis

using

Discover Financial Services

(DFS) - Get Report

, Google is set to go with its own system using

MasterCard

(MA) - Get Report

and

Citibank

(C) - Get Report

, according to

The Wall Street Journal

.

If everything goes according to plan, Google's near field communications (NFC) chips in Android phones will allow customers to make purchases on credit and debit cards at stores with

Verifone

(PAY)

terminals.

The move is just the latest that pits Google against its telco partners in a race to new mobile revenue streams. In Google's case however, the budding mobile payment technology may be more of an intelligence-gathering process for its advertising business.

This shift from using swipes of credit card magnetic strips to wireless delivery isn't a game changer, said Recon Analytics' Roger Entner. "People aren't going to drink more lattes because they can swipe it on their phones," he said.

But it represents "the holy grail for advertisers," said Entner. "What Google wants to do is collect as much data about you as possible so they can target ads to exactly what you are interested in."

While the topic of phones replacing wallets as a preferred payment system is a familiar one, widespread adoption still faces

major hurdles

.

For one, consumers have been leery of any technology that promises to beam their personal financial information through the air.

And second, the hardware to support NFC-based mobile payments is not widely available. Google, which has been a pioneer of the movement, only has one phone -- the

Samsung

Nexus S -- equipped with NFC.

With Google joining the game, the focus turns to a couple of key players that could still sway the development of the mobile pay market.

Apple

(AAPL) - Get Report

has long been expected to enter the field. The iPhone would make a logical extension of the powerful payment system behind iTunes and the App Store. And

eBay's

(EBAY) - Get Report

PayPal

is similarly well-positioned to handle mobile online payments.

Verifone shares were up more than 5% to $55.51 on the strength of Google's endorsement. Google shares were up 0.69% to $583.72.

--Written by Scott Moritz in New York.

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Scott Moritz

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