Google is hoping consumers will part with their wallets. No, they're not selling something, it's a new mobile payment system built into Android smart phones.

Vice President of Google Payments Osama Bedier demonstrates how to use the Google wallet application during a news conference unveiling the mobile payment system in New York May 26, 2011.

First there was cash......then credit......and now, all consumers will need is a smart phone.

Using MasterCard's PayPass touch-and-go-system, Google is launching Google Wallet for Android devices: the Internet giant's effort to bring a mobile cash system to the United States, which so far has been slow to adapt to digital cash payments.

For its part: MasterCard is hoping to beat out efforts by rival Visa and other financial companies to launch such a service.

Chris McWilton, President of U.S. markets, MasterCard, explains how it works.

Chris McWilton, President of US Markets, Mastercard said "That phone will have a chip in it, which enables you to basically wave it past a terminal and it will communicate, in a secured manner, the information in the wallet, which includes your credit card, your prepaid card information to the terminal and it will flow through the system just like a normal transaction."

Credit card issuer Citibank and mobile service provider Sprint are part of the team launching the service in New York and San Francisco by this summer.

And retailers like Macy's, Subway, and American Eagle Outfitters have signed on as well.

But will the U.S. consumer?

If you look at mobile banking as a clue, Americans have been slow to use their phones for money-related activities, according to a study by Forrester Research. Meanwhile, consumers in Asia, Europe, and even developing economies began using mobile phones as cash at least half a decade ago.

McWilton is hopeful - America is ready to catch up.

Chris McWilton said "The advancement of the smartphone technology is really putting America in a much more powerful place to be able to use their mobile phones for commerce and executing transactions that didn't exist three or four years ago."

Google and its partners say password entry at each encrypted transaction should convince Americans that even if they lose their phones, they won't lose their wallets.