Wireless service provider Verizon Wireless said it was not blocking Google Inc's payments app, Google Wallet, on its latest smartphone, and said it was still in talks with Google about the service.

Recent reports that Verizon is blocking Google Wallet on our devices are false, Verizon spokesman Jeffrey Nelson said in a statement on Tuesday.

Earlier, a Google spokesman had said that Verizon asked it not to include the function in the Galaxy Nexus smartphone due out this month. Google had declined to give more details.

Verizon said that because Google Wallet did not simply access the operating system and basic hardware of our phones like thousands of other applications, the service needs to be integrated into a new, secure and proprietary hardware element in our phones.

Verizon was in continuing talks with Google about the application, the spokesman said.

Galaxy Nexus is a smartphone developed by Google and Samsung Electronics Co Ltd based on the giant Internet search company's Android software.

Google Wallet lets people use phones to make payments, redeem digital coupons and earn loyalty points with merchants. The app is key to Google's attempt to tap the local-business advertising market.

Verizon, the U.S. top carrier, has formed a joint venture called Isis with rival AT&T Inc T.N and Deutsche Telekom AG's DTEGn.DE T-Mobile USA that lets people make payments and redeem offers via their smartphones. Isis is expected to begin trials next year, the Wall Street Journal said.

Verizon Wireless is a joint venture of Verizon Communications Inc and Vodafone Group Plc.

The Wall Street Journal first reported the story.

(Reporting by Rachana Khanzode in Bangalore and Jennifer Saba and Nicola Leske in New York; Editing by Mark Potter, Gary Hill)

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