Back in May, this blog reported on the unveiling of Google Wallet (Credit cards minus plastic equals Google Wallet? Maybe). This allows you to pay in-store by tapping your smartphone on a wireless (near-field communication (NFC)) payment terminal instead of swiping your credit card. Indeed, you don’t need to have your card with you at all, even though the transaction is going to be charged to its account.

Credit card use without the card becomes real

Now, nearly four months after that unveiling, it’s finally possible for consumers actually to use Google Wallet. But, even if you’re an “early adopter,” you probably won’t be able to try out the new service just yet. In order to do so, you need:

1. A Sprint Nexus S 4G smartphone
2. A Citi® MasterCard® credit card or a Google-branded prepaid card
3. A Google Wallet account
4. To be in one of the 135,000 stores nationwide that currently have a near-field communication (NFC) payment terminal using MasterCard’s PayPass service

But all that could change soon. CBS News says that Google has licensed American Express, Discover and Visa to use its Wallet service, and many expect other cellphone carriers to partner up with the company soon. Ultimately, it’s possible that anyone with a smartphone (certainly one that uses Google’s Android operating system) will be able to use it to pay from virtually any credit card account.

Credit card trends and competition

Google Wallet isn’t the first virtual account. PayPal already allows its customers to pay in-store using a smartphoine, although its service doesn’t use NFC technology, and instead you key your cellphone number and personal identification number (PIN) into a traditional terminal. And, of course, the money’s deducted from your PayPal account, so for some, Google Wallet may lack the flexibility that a credit card offers.

And Google Wallet is unlikely to be the last virtual account. Already, AT&T, T-Mobile and Verizon Wireless have teamed up to develop their own competing product, and they too are working with American Express, Discover, MasterCard and Visa.

More than what a credit card offers?

At this point, you may well be asking yourself what the point of this new technology is. After all, how much easier is it to use an application such as Google Wallet than simply swipe your card?

Well, the driver behind the technology is the idea that companies can influence your purchasing decisions at a point of sale. So users are likely automatically to receive vouchers, discounts and other offers. Will that be enough to tempt consumers? Only time will tell.

Certainly, there are at least four obstacles to mass adoption:

1. Nobody yet knows whether Google Wallet or a competitor will win the technology race (remember VHS and Betamax?) so there may be a reluctance to back anyone.
2. Consumers are going to want loads of reassurance about the security of the new systems before they’re comfortable using them, just as they did with online banking.
3. Many people (especially older ones who struggle to read small screens or who may be naturally technophobic) don’t like smartphones.
4. It may take some years for NFC terminals to become ubiquitous, and in the meantime consumers will have to continue to carry their credit cards. Will they bother or remember to use their smartphones when they have the chance?

So it’s by no means a given that these virtual credit card accounts will take off. Mind you, your blogger seems to recall saying in the 1980s something similar about cellphones.

Published 09/20/11 (Modified 04/20/12)