Google and PayPal have each bolted out of the gate in these early days of the mobile wallet, with PayPal outlining its ambitious initiative two weeks ago and Google Wallet coming to market just a few days later on Sprint Nexus S handsets. While Google’s effort is centered on short-range NFC technology, PayPal is eschewing the stuff in favor of a multifaceted, less techie approach. But both will require significant changes in how consumers buy and how retailers sell. That’s why both are a long way from getting legs.

To NFC or not to NFC?

As my colleague Ryan Kim documented, Google Wallet requires users to sign in to their Google accounts on their handsets and then load their Citibank MasterCard accounts (to be accessed directly from the app) or load funds into a Google Prepaid Card. While establishing and maintaining an account is a slight hassle, NFC enables a lightning-fast transaction (and that catchy tap!) that provides users with an updated balance as they shop. But the real selling point for Google Wallet is its integration with Google Offers and Google Shopper, which enables users to search for nearby discounts and save them to the app.

PayPal, by way of contrast, uses several alternative methods to enable transactions. The company’s blog post outlining the service features a video showing one woman scanning bar codes to buy items at the shelf in a corner store, while a man enters his phone number and PIN at a counter terminal before walking away with his new grill. And like Google Wallet, PayPal is wisely trying to lure users by helping them shop easily and cheaply. Before buying a grill in the PayPal video, for instance, the shopper scans a coupon in the store entryway while a woman who finds a dress she likes at a chain store is informed which outlet has the clothing in her size.

Early leaders in a marathon

But delivering those compelling apps isn’t easy: Apps must be created that integrate with the specific payment systems, and local ad networks must be built that can deliver enough offers to make mobile payments worthwhile for consumers. Google has a head start over PayPal here, but it will take many months — and maybe a few years — before either player offers a compelling app that supports transactions and offers from dozens of vendors, both local and national.

Just as daunting, though, is the challenge of building an infrastructure to support mobile payments. PayPal’s lack of dependence on NFC appears to give it an early edge: NFC-equipped handsets will claim just a fraction of the worldwide device market in 2015, as David Chamberlain recently noted in this GigaOM Pro report, and retailers must adopt NFC-enabled terminals.

But don’t make the mistake of thinking that PayPal’s NFC-less strategy paves a smooth road to market. In the video demo, the woman who scans the bar code in a store bypasses a long line at the counter by simply flashing her phone at the swamped clerk – a laughable proposition. Instead, a retailer would need to install a stand-alone reader or employ some other method of verifying purchases. And integrating PayPal’s system with existing pay terminals won’t be painless.

PayPal and Google are clearly sprinting to deliver a mobile wallet, but they’ll soon be joined by an army of players, from powerhouse carriers and credit card companies (Isis looks particularly compelling) to startups such as Dwolla. It’s far too early to lay odds on who will end up on top or whether NFC — or any other technology — will be a force in the space. But players who aren’t already laying out their strategies and building their ecosystems will lose a race that’s only just begun.

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