The amount of various cards inside wallets is increasing year-over-year as more merchants introduce loyalty cards and more services are used. One radical way to reduce the number of plastic inside wallet is to introduce a universal card that integrates them all somehow, but that is not something feasible. Google and its partners offer a different solution: to fit them all into a mobile phone with near-field communication (NFC) technology.

Google along with Citi, MasterCard, First Data and Sprint on Thursday demonstrated Google Wallet, an app that transforms a phone into a wallet. Users will have to tap the phone to pay or redeem certain offerings or coupons. The Google Wallet app will be able to store credit cards, offers, loyalty cards and gift cards. When one taps to pay, the phone will also automatically redeem offers and earn loyalty points for the customer. Someday, even things like boarding passes, tickets, ID and keys could be stored in Google Wallet.

"With Google Wallet, we’re building an open commerce ecosystem, and we’re planning to develop APIs that will enable integration with numerous partners," a statement by Google reads.

At first, Google Wallet will support both Citi MasterCard and a Google Prepaid Card, which is possible to fund with almost any payment card. From the outset, customers will be able to tap their phones to pay wherever MasterCard PayPass is accepted. Google Wallet will also sync Google Offers, which will be able to be redeemed via NFC at participating SingleTap merchants, or by showing the barcode during check out. Many merchants are working to integrate their offers and loyalty programs with Google Wallet.

In the beginning, Google Wallet will be compatible with Nexus S 4G by Google, available on Sprint. Over time, Google plans on expanding support to more phones.

Google's Wallet is a key part of its ongoing effort to improve shopping for both businesses and consumers by making it easier for customers to pay for and save on the goods, while giving merchants more ways to offer coupons and loyalty programs to customers, as well as bridging the gap between online and offline commerce.

Tags: Google, Google Wallet, Citi, Nexus, MasterCard, Spring, FirstData, Android