Pay with your phone: Google Wallet
The most popular item in CNN Money right now is Mark Zuckerberg’s eating only meat that he kills.
I’ve opted to talk about the most important article, instead! 
Stephanie Tilenius, Google’s vice president of commerce, announced today at a press event in New York that Google is teaming with MasterCard, Citigroup, and Sprint to launch a new phone-based mobile payment system. “Google Wallet” will employ special chips embedded in many future Android devices to be used for payments, and Google now requires that near field communication (NFC) chips be embedded in Android devices that launch with the latest version of the operating system. So… most new Android phones available later this year with be able to use Google Wallet (only Sprint’s Nexus S phone can use the system right now), and customers will be able to wave such Android devices in front of a reader to make a payment!
Although only Citibank customers will be able to use their phones as wallets for now, Google developed an open platform that can be used on any device or card and hopes that more partners will soon come on board. Google Wallet will launch in San Francisco and New York this summer and will “go national” in coming months.
Competitors that will use NFC include Verizon, AT&T and T-Mobile, which announced last year that they will create a venture with Discover to allow customers to pay with their cell phones. However, only 150,000 NFC contactless readers have been installed by retailers in the U.S. according to the Federal Reserve. Google announced that Wallet will work with 120,000 retailers in the U.S. and 300,000 globally.
Google will not take a “cut” of the transactions, like MasterCard does. Instead, Google will help companies target advertising to customers on the basis of their purchases and will provide information that will allow retailers to send offers and discounts to specific people through a separate program, Google Offers. Google Offers will work in some ways like Groupon, which was the object of an unsuccessful buy-out attempt by Google this year.
Other competing technologies include Square, the startup by Twitter co-founder Jack Dorsey. Square has announced an app for iPad that replaces cash registers at stores and allows customers to pay with their Android or iOS devices and to start tabs by using their names! No additional hardware or NFC is involved. Some 500,000 Square card readers have been shipped, and Square says that they are processing $3 million/day in mobile payments.
Other features of Google’s system include:
- signal encryption on the NFC device, more difficult to steal than magnetic strips in credit cards
- use of a PIN by customers to reduce potential financial loss if the phone is stolen
- the addition of multiple cards, including rewards cards and coupons into phones
- capture of online offers from adds or deals from NFC-enabled posters by phones
- eventual addition of everything is a real wallet, including driver’s license, to a phone
Although “safety” and “convenience” are two of the principal ways that we lose our privacy and our liberties, we seem “fixed” to the path of mobile payments, with the only question being “which technologies will prevail?”
We shall have to wait to see what kind of society these technologies create.
-Bill at
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