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Thursday, May 26, 2011, 08:00 pm PT (11:00 pm ET)

Google launches NFC payment service, eBay sues alleging theft

After Google unveiled the Google Wallet Near Field Communication mobile payment service on Thursday, eBay and subsidiary PayPal filed a lawsuit alleging the project's team lead stole trade secrets to create the service.

Mountain View, Calif.-based Google showed off the new mobile payment Android app at an event in New York City Thursday. Google Wallet utilizes virtual cards, such as a Google Prepaid Card, to 'tap to pay' via NFC technology.

CitiBank will participate as an early partner, as the service will support all Citi MasterCards at launch. Google Prepaid Cards can be topped up with any existing credit card. Eventually, the service will support loyalty cards, gift cards, receipts, boarding passes, tickets and even keys.

Google Wallet will launch first on the flagship Nexus S 4G on the Sprint network. Android boss Andy Rubin said last year that the Nexus S, which was co-developed by Google and Samsung, was "the lead device for the Gingerbread/Android 2.3 release."

MacNN reports that, within hours of the Google Wallet launch, eBay sued the search giant for allegedly using the company's trade secrets to build the technology. According to the complaint, Google Wallet project lead Osama Bedier was poached away from PayPal in the middle of negotiating a deal between the two companies.

"At the very point when the companies were negotiating and finalizing the Android-PayPal deal, Bedier was interviewing for a job at Google — without informing PayPal of this conflicting position," eBay and PayPal said. Bedier allegedly brought to Google proprietary technical knowledge from PayPal, as well as knowledge of "major retailers," and tried to poach PayPal employees while at Google.

The lawsuit also alleges that former eBay executive Stephanie Tilenius breached a consulting contract with the company by joining Google as its VP of commerce a month before it finished.

As a competing virtual payment solution, Google Wallet resembles PayPal in several aspects. Google has yet to respond to the accusations. If the two companies are unable to reach a settlement and the lawsuit holds up in court, it could threaten the fledgling service.

Apple is expected to join the fray with its own NFC payment solution. Reports differ on whether the iPhone maker will add NFC functionality to its next generation smartphone. Earlier this month, one Wall Street research firm claimed Apple will not add a Radio Frequency Identification chip, while rumors swirled earlier in the year that Apple would include an NFC chip for an e-wallet service in the next-generation iPhone.

In April, Apple was awarded a patent for an RFID tag reader embedded within a touch panel to save space. According to analyst Brian White of Ticonderoga Securities, Apple is planning to utilize NFC with a "unique twist" beyond just e-wallet functionality.

RFID patent