The Google Wallet
May 27, New York, N.Y.
If you think the only thing left for Google to try is to maybe come up with a way to
print money, they actually got a little closer to that yesterday with their press
conference announcement of the Google Wallet. It isn’t an original Google
technology, but the prospect of a new payment processing system residing on Google
phones might cause some trepidation for the neighbors over at PayPal in San Jose.
The Google Wallet will be based on the NFC (Near Field Communication)
Near Field Communication is a short-range, low-power communications protocol
that is based on radio transmissions. It’s different from Bluetooth transmissions
because it only works over very short distances, usually between two devices, say a
smartphone and a scanner/receiver.
The protocol has been developed in three different kinds of applications. There are
those that share information, some that pair devices, and there are the
transactional apps. The sharing might involve a public service display that will
send a website address to your phone that opens a set of maps appropriate for the
neighborhood in which you’re currently lost. The pairing might unlock a door or
disable a security alarm.
The first NFC systems to really take off have been the transactional ones, but that’s
happened mostly in other parts of the world--Europe and the Far East. The Oyster
Card for public transit in London, a swipe card that’s touchless, works in a way
similar to the systems developed for smartphones with NFC. You tap your NFC-
enabled mobile phone against a payment terminal, and the account keyed to the
device will be debited. Either the payment is deducted from a preloaded amount of
cash, or the connection is linked to a bank account where a withdrawal is made.
Sounds like an interesting system, but what if you replace your wallet with an NFC
phone and then lose your phone? Wouldn’t that be a far bigger pain than if you were
to misplace your cowhide wallet? Well, if you lose a physical wallet, you can expect
to be on the phone for a while, notifying banks and other credit and debit card
services. And then there are your license, your IDs, the kids’ pictures. With an NFC
smartphone using Google Wallet, the accounts and information are encrypted so the
finder isn’t going to be able to use the credit or debit cards. Your IDs would be
backed up elsewhere and recoverable by you. You can also set up programs that
allow you to remotely wipe an NFC-enabled smartphone of any critical information
that you keep on it.
Walking Around Money
At the Google press conference yesterday in New York City, the Mountain View,
Calif., search giant announced both the Google Wallet application and Google
Offers, a protocol that will take advantage of coupons and offers on a smartphone
equipped with Google Wallet.
The Wallet application requires NFC technology to be wired into the phone’s
system, and that resides on a special chip to keep the processes and information
locked away from the rest of the hardware. The Wallet will be able to store and use
multiple credit cards as well as loyalty, gift, and debit cards, and it can be locked
when not in use. The rollout is planned for this summer and will start in New York
and San Francisco.
The Google Offers function will enable and store payment offers such as ads,
coupons, place offers, and more. The app will let you search local offers on your Web
browser and get coupons and product offers online. The Offers application will be
rolled out this summer beginning in Portland, Ore., San Francisco, and New York.
The Google engineers at the press conference promised that eventually you will be
able to store other kinds of documents and cards in your Google Wallet, including
things like driver’s licenses. Your smartphone will replace your wallet.
Google is working with four major partners and many retailers, and right now
Wallet is functional on certain models of Google phones for those who use Citibank
and are able to locate retailers already equipped to read the Google Wallet taps.
This new commerce was referred to in the press conference as MoLo—Mobile Local
The four major partners currently on board are Citibank, MasterCard, First Data,
and Sprint. The Citi representative said his bank wants to be “the world’s digital
bank,” and MasterCard said they had 100,000 merchants ready to go with Google
Wallet. The electronic payments giant, First Data, explained that they are ready to
start the implementation in the four million merchant locations where they process
40 billion transactions a year. And Sprint, a founding carrier partner, pointed out
that 75% of their sales today are Android (Google OS) phones.
Google Wallet and Offers will be available at no cost, and it’s assumed that the
revenue streams for Google will also involve advertising. There’s an FAQ for the
Wallet technology on the google.com/wallet website.
Being first and having a large-scale rollout would give Google Inc. a significant head
start over companies like Apple, which is rumored to be working on a similar
technology for its iPhone. A question not brought up at the press conference was,
“Why have we been so slow implementing NFC compared to Europe and Japan?”
Some, or a lot of that has to do with the absence of standard platforms. It’s
noteworthy that the Google Wallet is written on an open platform. If you assume
that Apple is working on a closed, proprietary model for its very popular iPhone,
perhaps this next evolution of the credit card will provide us with the next tech