Google will unveil a new payment system tomorrow, a move the company hopes will pit the search-giant against companies like Visa and Mastercard.

The company will unveil a mobile- payment service May 26 that will be available on phones from Sprint Nextel Corp. (S), according to various reports.

The service will let consumers with specially equipped phones that run on Google's Android operating system pay for goods and redeem coupons with their handsets.

Google has teamed with MasterCard and Citigroup to develop the system, the Wall Street Journal reported in March.

It has now signed up retail partners Macy's , American Eagle Outfitters and Subway, though it remains to be see if the program is rolled out nationally.

The new service relies on Near Field Contact  -- a technology that allows users to simply swipe their phones across pay terminals

Google invited reporters to attend a partner event on Thursday in New York to demonstrate what it called its latest innovations.

Rival Apple is also planning on releasing similar technology in its upcoming iPhone analysts have said.

Shoppers abroad, especially in Asia, can already wave cellphones at the check-out counter to pay for everything from groceries to gasoline.