Would you rather leave home without your wallet and be penniless all day, or leave your phone at home and be out of touch all day? Many people would rather be penniless. If only phones could be used to pay for things, it would be easier to leave a wallet behind.

Enter Google Wallet, the search engine’s answer to this problem. This mobile app uses a chip in the phone so it can be waved in front of payment stations to buy things. Users set it up by registering a credit card to the phone or loading a Google Prepaid Card with a credit card. A four-digit password enables payment transactions. Google Wallet is rolling out this week to Sprint’s already available, $50 (after $50 mail-in rebate and with a two-year contract) Nexus S 4G phones by way of an Android operating-system software update.

I’ve been trying Google Wallet in Washington, D.C., and Palo Alto, Calif., and I find it delightfully easy to use. Though still in its infancy, it isn’t hard to imagine digital payments catching on and becoming commonplace. But there are plenty of caveats.

Google Wallet works only with phones with an NFC (near field communication) chip, which allows secure digital transactions over a short distance. In Japan, millions of cellphone users have been using mobile wallets with NFC chips, but the technology has been slow to catch on in other countries. For now, the Nexus S 4G is the only phone in the U.S. that works with Google Wallet, though more phones are expected soon.

Paying with Google Wallet is possible only at stores that offer MasterCard PayPass. In Washington, D.C., near my office and home, these included Sunoco, McDonald’s, CVS and Papyrus; other stores include Home Depot, 7-Eleven, Best Buy and OfficeMax. A MasterCard PayPass finder is built into the app and displays nearby locations where PayPass works. These can be viewed on a map, in a list or filtered by category. For now, only 150,000 merchants have the equipment in stores to use PayPass.

Citi MasterCard is currently the only credit card that can be directly added to Google Wallet, but the Google Prepaid Card can be loaded with other credit cards. Google said it will also work with Visa, American Express and Discover cards, but couldn’t say when.

Several other companies are planning their own digital-payment solutions. Last week, PayPal said it would launch pilot programs at the end of this year for a cloud wallet, usable by entering a phone number and a PIN at the register. Square has launched Square Card Case, a free app available on Android and iPhone that works on the idea of paying with virtual tabs, like starting a tab at a bar. Both ideas from PayPal and Square would avoid the need for phones with NFC chips.

Next month, Google Wallet will let people register their store loyalty cards and gift cards in the app so a Wallet purchase at CVS, for example, would recognize my CVS ExtraCare card. Registering a gift card from, say Macy’s, saves the trouble of carrying the card at all times. (Currently, only American Eagle Outfitters allows loyalty cards and gift cards with Google Wallet in some of its New York stores.)

People also will be able to search for more store coupons on Google’s search engine and click to add them to their Google accounts for synchronizing with Google Wallet.

READ MORE: WSJ