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Google Whips Out an E-Wallet

Google Whips Out an E-Wallet

Google has unveiled its mobile payment system, dubbed "Google Wallet." The system allows users to make credit card transactions with retailers simply by swiping their cellphones in front of sensors. Such payment systems might have potential in the U.S., but for now they remain limited. At the outset, Google Wallet will only work with one kind of phone and one kind of credit card, and only at participating retailers.

Google officially unveiled its e-wallet Thursday in a presentation with its partners at an event in New York.

Google executives demonstrated making purchases and downloading e-coupons with the e-wallet through a Google Nexus S Android smartphone. They added that eventually consumers might even store their drivers' licenses in it.

The Google Wallet is secure, Google representatives said, and the NFC chip in the smartphone will only be turned on when the consumer wants to actually use the e-wallet. This is meant to prevent hackers from "sniffing" the card and stealing information.

Google's partners in the NFC project include MasterCard, Macy's, Subway, American Eagle, Citibank and Sprint.

Trials of the Google Wallet begin in New York and San Francisco Thursday. They will be expanded to other parts of the United States later.

Google called on other banks as well as mobile phone carriers and retailers to partner with it.

"The groundbreaking part of this announcement is that Google's committed to moving NFC forward," Mark Beccue a senior analyst at ABI Research, told TechNewsWorld. "But there's no single NFC standard yet."

Google on Thursday also announced Google Offers -- e-coupons -- in conjunction with Google Wallet.

Some Details About the Google Wallet

The Google Wallet initially runs on the Samsung Nexus S smartphone running Android. It takes Citibank's MasterCard by default, although it will support other cards and Google is trying to get other card issuers on board.

Google Wallet is compatible with MasterCard's PayPass, which is accepted by many retailers around the world.

Consumers tap the phone to pay the cashier when they shop at outlets that work with Google Wallet. Tapping the device automatically applies all loyalty rewards and coupons, crediting them toward the bill.

When consumes activate their accounts, the personal information goes to their banks, which work with First Data, the trusted services manager for Google Wallet.

They are then allowed to use the Google Wallet immediately, but their expenditure is limited to $100 until they enter a confirmation code sent by SMS or email.

Google also announced a prepaid credit card which can be provisioned from a consumer's major credit cards by tapping the smartphone.

The Google Wallet is based on the NXP PN65 chip from NXP Semiconductors.

Google won't charge consumers for using the Google Wallet. The Internet giant will be the merchant of record, but it will not store data about transactions.

Deconstructing the Google Wallet

"At this point, the audience for Google Wallet is limited," ABI's Beccue pointed out. "You have to be a Sprint customer with a Nexus S smartphone and have a Citigroup MasterCard. I don't know how many people that is."

Also, the number of retailers who can accept Google Wallet payments is currently limited.

"The retailer has to have a MasterCard PayPass device, and there are only about 120,000 of those throughout the United States," Beccue said. "That's nothing."

Further, that there is no single standard for NFC, even though the NFC Forum is working on standards, Beccue said.

"Google said in the announcement that they'll require their OEMs build an NFC chip into Android smartphones and that might sway things towards a de facto standard," Beccue stated.

However, whether or not Google can force its OEMs to implement an NFC chip in their Android smartphones is open to question, Beccue warned.

ISIS, a consortium set up by AT&T Mobile, Verizon Wireless and T-Mobile to get into the NFC payment space, may come up with its own NFC standard over time.

"Unless a single standard has been laid down, the different modes of payment will conflict," Beccue warned. "Of course, Google and ISIS could end up agreeing on one standard," he speculated.

We shouldn't really expect NFC to take off until about 2013, Beccue suggested.

Playing With (or Without) PayPal

Google will also have to go head to head with the granddaddy of e-commerce, PayPal.

"While other companies are following PayPal's business model, we're already light years ahead," PayPal spokesperson Anuj Nayar told TechNewsWorld. "More than 98 million people around the world have already trusted us with their digital wallets."

Mobile is "just another access device," Nayar contended.

Phone Issues

What happens if a consumer loses a smartphone loaded with Google Wallet?

Apparently the device can be wiped remotely, although Google did not indicate how this could be done.

Further, the PIN number would theoretically protect data on the device.

The user would have to resort to traditional credit cards once he or she lost a smartphone equipped with Google Wallet, Google executives said at the presentation in response to questions.

Google did not respond to requests for additional comment by press time.


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