Google faces lawsuit over mobile phone 'Wallet'

Google faced a lawsuit today after it unveiled a free mobile application that turns a smartphone into an electronic wallet and is designed to replace plastic credit cards.

PayPal and eBay filed a lawsuit in a California state court yesterday, charging that the Internet giant tapped into trade secrets for its newly released Google Wallet. Google did not immediately respond to the allegations.

PayPal spent three years trying to work out a deal in which it would handle payments for Android smartphones, only to see Google scuttle the talks and hire its lead negotiator Osama Bedier, according to court documents.

Bedier worked at the eBay-owned online financial services unit as a vice president of platform, mobile, and new ventures until being hired in January by Google.

He played a central role at Google's official unveiling in New York with financial partners Citibank, MasterCard and First Data and telecom ally Sprint, saying Google Wallet is being field tested and will be available this summer.

Google Wallet will initially work with Google's Nexus S 4G smartphone from Sprint, the third-largest US wireless provider, and will eventually be expanded to other phones equipped with near field communication (NFC) technology.

An NFC chip in a phone allows a user who has entered his or her credit card details to "tap-and-pay" for purchases at a checkout register equipped with the PayPass system from CitiMasterCard.