"Your phone will be your wallet." That's what Google's promising with Google Wallet and Google Offers, which'll combine payments and deals in one neat package. And it's a pretty compelling little vision of the future of paying for stuff.
Google Wallet isn't really one thing, so much as a bundle things tied together in one package. It's an Android app. It's a way for you to pay for things with your credit or debit cards, using your phone. It's a coupon collector and loyalty card system. It's another way for merchants to let you pay and offer up deals. It hooks into other Google services, like Shopper (which shows you nearby deals) and Google Offers. And Google is planning for it to eventually store everything you'd keep in a wallet.
The core payment technology uses wireless NFC and more specifically, MasterCard's PayPass system, so you'll be able to use it anywhere that's hooked up with PayPass, which is at a lot of retailers already. Google's SingleTap is the extra Google-y implementation with select partners, with the full Google Wallet perks, like easily redeeming deals, loyalty credits and all of swizzle-y future of commerce stuff. (For non-SingleTap merchants using plain old PayPass, it'd be just like using a PayPass MasterCard, but with the phone instead.)