Google appears to be ready to outline its plan to turn smartphones into mobile wallets.

The Web giant is expected to unveil a mobile payments system on Thursday that will operate on select Android-based Sprint phones, according to a Bloomberg report that cited unidentified sources familiar with the matter. Google reportedly plans to introduce the service initially in New York, San Francisco, Los Angeles, Chicago and Washington, D.C.

A Google representative declined to comment on the report.

The service, which will reportedly tap near-field communications technology, would allow users to pay for retail purchases by holding the devices up to a specialized reader at checkout counters. NFC technology lets devices exchange information wirelessly with one another over very short distances, about 4 inches.

The report follows a Wall Street Journal report in March that Google was partnering with MasterCard and Citigroup to allow the financial giants' customers to use their debit and credit cards to pay for purchase from their Android smartphones. Google also reportedly paid for the installation of thousands of NFC short-range, wireless point-of-sale systems from VeriFone at stores in New York and San Francisco.

There are currently only two phones with NFC chips installed for sale in the United States: the Google Nexus S and the Nokia C7 or Astound. But many more are expected to be on the way by the end of this year' Forrester researchers expect 40 million to 50 million NFC-equipped phones to be sold in 2011.

Demand for mobile wallet services is expected to be great, with the total value of mobile transactions reaching $245 billion in 2014, according to market researcher Gartner.

Google is also reportedly interested in taking the information gathered via NFC payments to brick-and-mortar retailers and utilizing it to sell targeted ads, in much the way company aims ads at people based on their Google searches or Gmail messages.

Google is not be alone with its NFC ambitions. Companies across the wireless sector are angling for a piece of the burgeoning mobile payments business, including wireless providers, smartphone manufacturers, credit card companies, retailers, and mobile advertisers. T-Mobile, AT&T, and Verizon have already announced they've formed a joint-venture payment system called Isis, which is expected to be ready for mobile customers this fall.

Microsoft is also said to be planning to include NFC technology in a future phone with Windows Phone 7, and Apple has been rumored for almost a year to have something similar in the works. Amazon.com is said to be exploring the possibility of enabling an NFC service for smartphones.

Samsung and Visa have said they'll be facilitating mobile payments via NFC on smartphones during the summer Olympics in London next year.