Google on thursday announced its tap-to-pay technology called Google Wallet. It is an Android app that stores virtual credit cards and allows payments to be made by simply taping phone near a merchant’s terminal. The app will also allow earning loyalty points and store coupons which will automatically be applied on purchases.
Google also announced Google Offers which will be sent through the phone as Google strikes advertising partnerships with businesses. Similarly to what Groupon does, Google will take a cut every time someone redeems such offers, providing it with a revenue source.
Google has big dreams for Google Wallet, and hopes for it to one day contain not just credit cards, but car keys, boarding passes, driver’s licenses and so on. The service is long ways off from that, however, as even in its current form it is initially going to be limited only to a Nexus S 4G phone on Sprint network in the US, and will hold only Citibank issued MasterCard and Google’s Prepaid MasterCard. This method of payment will also work only at 124,000 merchants with MasterCard’s PayPass terminals.
The underlying technology behind Google Wallet is called “Near Field Communications” (NFC) which involves a chip within a mobile phone that is able to communicate with NFC terminals. For security, the Google Wallet app will require entering a PIN for access, and all payment data will be encrypted and stored on an NFC chip. Google is working with First Data, its trusted partner, to secure these transactions made using Google Wallet.
Of course, if the phone’s battery dies access to the Google Wallet becomes unavailable as well, albeit this shouldn’t dissuade many given already existing dependence on phones for communications and various online services.
If the phone is lost, Google says it will be possible to remotely wipe the phone, but others have also suggested a possibility of deactivating NFC services of a given account through an online service in order to make the Google Wallet in the hands of an unauthorized user inoperable.
The technology is appealing, but it will take a while before it is widely adopted, both in the US and globally. It is desirable for the NFC technology used to be standardized to avoid fragmentation due to conflicting implementations, which will probably be required before this method of payment becomes ubiquitous.
Google will also have to deal with PayPal with its nearly 100 million users and a reputation as a de facto standard for online payments. It is easy to see how something like Google Wallet could be integrated with PayPal. Google is also facing a lawsuit just filed by PayPal over alleged misappropriation of trade secrets from PayPal’s mobile payments business by two former PayPal executives now working at Google.
For more official information go to a Google Wallet site.
