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PayPal accuses Google of blatant digital wallet theft

Just hours after Google launched its mobile payment service, PayPal filed a lawsuit against the Web giant for allegedly stealing its technology that turns smart phones into digital wallets.

Just hours after Google launched its mobile payment service, PayPal filed a lawsuit against the Web giant for allegedly stealing its technology that turns smart phones into digital wallets, the Guardian reports.

eBay's PayPal is accusing Google and two of its key executives of stealing trade secrets that were key to stitching together Google Wallet. The payment processing company says it had been working on the service over the past year trying to provide retailers with the new mobile system -- only for Google to spoil it.

The two executives -- Osama Bedier (pictured above) and Stephanie Tilenius – were PayPal employees up until recently, before reportedly switching to Google to work on the contactless payment technology. PayPal claims that Bedier -- now Google's vice president of payments -- was in job talks with the search engine company at the same time he was leading negotiations to make PayPal a payment option on Android.

Tilenius joined the Web giant in February 2010 as vice president of e-commerce, and Bedier followed in January 2011. Bedier is accused of having "misappropriated PayPal trade secrets by disclosing them within Google and to major retailers" and to have "violated his obligations to eBay by soliciting and recruiting PayPal employees to work at Google."

The law suit (PDF) was filed in California, soon after Google showed off the digital wallet at a press conference in New York, where both executives were headliners. The new mobile payment service lets you pay for your stuff by swiftly waving at a payment reader with an Android device.

The contactless payments are enabled by a near-field communication (NFC) chip which stores your details inside your phone and communicates with the bank to authenticate the transfer. When it's launched this summer, it'll be available only on the Nexus S 4G on Sprint (a US-only phone) but Google's planning on adding more phones soon.

The service will be available only in the US for now, but the UK had the privilege a similar service last week with Quick Tap, launched by Orange and Barclaycard.

Google has not responded to PayPal's allegations yet. Can you predict the lawsuit? Have your say in the comments section below.

Image credit: AP