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Credit cards minus plastic equals Google Wallet? Maybe

by Peter Andrew

Last week, a small group of partner companies unveiled Google Wallet, a new service that allows you to access your credit card securely and pay for goods and services at brick-and-mortar outlets using your smartphone. Google Wallet partners include Google, Citi, MasterCard and Sprint so it's probably a good idea to take the new product seriously. Stephanie Tilenius, Google vice president of commerce and payments, said in a statement:

"Today, we've joined with leaders in the industry to build the next generation of mobile commerce. With Citi, MasterCard, First Data and Sprint we're building an open commerce ecosystem that for the first time will make it possible for you to pay with an NFC (near field communication) wallet and redeem consumer promotions all in one tap, while shopping offline."

Putting the "app" in credit card application

Here's an example how Google Wallet may change your credit card use. You're in a store or restaurant that has PayPass payment technology (currently there are 124,000 in the U.S.). The time has come to get out your credit card but this time you reach for your smartphone, hold it close to an NFC terminal and tap your screen once. That's it. No swiping, no signing, no waiting.

That's the way it could be, if Google Wallet becomes available to consumers as scheduled later this summer. However, there are some caveats. To start with, the credit card application is initially only going to work with a PayPass-eligible Citi MasterCard or with a virtual Google Prepaid card. And, for the time being, it can only be loaded on a Sprint Nexus S phone. Needless to say, Google hopes that other credit card companies, smartphone manufacturers and mobile carriers will soon join its party.

Credit card use hard to change

Presumably, because the partner companies recognize that people tend to be conservative when it comes to payment methods, some tempting offers and discounts are planned to encourage consumers to use Google Wallet.

It took a long time for online shopping and banking to be trusted as secure, and many are likely to be equally wary of wireless shopping. However, in a press release, Google claims that its new product is highly secure:

"Google Wallet is engineered to enable secure payments and goes beyond what's possible with traditional wallets and cards. It will require an app-specific PIN and in the first release, all payment card credentials will be encrypted and stored on a chip, called the secure element, that is separate from the Android device memory and is only accessible by authorized programs."

That "app-specific PIN" is a bit of a sticking point. You may have to tap your smartphone screen only once in order to send a payment, but first you're going to have to access the app, and enable it by keying in your four-digit personal identification number (PIN). That's not a major headache, but it does detract somewhat from ease-of-use claims.

Credit cards in cyberspace

Many commentators believe that credit cards in their traditional plastic form will all but disappear over the next decade or so, to be replaced by apps such as this one. And, certainly, plenty of technology and credit card companies are working on similar products to Google Wallet.

However, widespread consumer acceptance may take longer to achieve than some currently expect. "Early adopters" love innovation per se, but others may take some persuading that there are compelling reasons to switch to this sort of new technology.

And it may be that the road hasn't been all that smooth for Google so far. An MSNBC story, which ran under the headline "Tech industry abuzz over 'Google Wallet,'" was dated June 21, 2005.

Published 05/31/11 (Modified 04/20/12)


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