Google Wallet is a service that allows you to pay for purchases online or in person at eligible locations with an eligible Android smartphone using NFC (Near Field Communication) wireless technology (the smartphone must have a Secure Element chip). It is linked to your credit and debit cards; when you buy items or services from your phone, Google reimburses the merchants involved and then collects payment from your card (buying items online works differently; your own cards are charged directly). The payment processing is handled by Google free of charge.

The Google Wallet mobile app is being expanded to Apple’s iOS platform; as of last month iPhone users could request an invite, according to 9to5Google, which seems to indicate the app for that platform is still in the early stages. The iPhone doesn’t use NFC, but 9to5Google states “perhaps it could provide some type of integration with Apple’s Passbook feature on iOS” although full details remain to be seen. An article on Androidpolice.com indicates Google will be rolling out a physical card soon as well.

When was it released?

According to the Wikipedia entry for Google Wallet, this service was released on September 19, 2011. It has been talked about on a few occasions here at TechRepublic. Notably, Kevin Purdy discussed the subject here on the Google in the Enterprise Blog last year, and Joshua Burke covered it on the Smartphones Blog early in 2012 with a good analysis of the security aspects of the service including how Secure Element works.

At its debut, Google Wallet was only available for the Sprint Nexus 4G phone. You could only use it with a MasterCard issued by Citibank or a Google Prepaid Card. It was only accepted at places with the MasterCard PayPass logo. Clearly it was a fledgling technology surrounded by broken eggshells.

A year of real time use is sometimes worth about seven in the technology realm (or so it seems nowadays, when news even three months old seems horribly outdated). Let’s see how the duckling has matured.

How has it developed since last year?

Google Wallet is now open to all credit and debit cards including American Express, Discover, Visa and MasterCard (Google still provides subscribers with a virtual prepaid MasterCard used to conduct the in-store transactions). This is a big step forward and has helped facilitate both the phone-based and online shopping aspects of the service. However, it’s only one battle in the overall war that’s currently going on in the mobile payments space, where Google is up against PayPal, Amazon, and Square, not to mention other carriers. According to an article on Digital Transactions, “the country’s three largest carriers – AT&T Mobility, T-Mobile USA, and Verizon Wireless – have instead supported their own wallet venture, Isis.”

Google Wallet still only runs on certain phones on the Sprint/Virgin Mobile/US Cellular networks, with the exception of Galaxy S3 phones on MetroPCS.

Here’s the full list of eligible devices from Google:

Figure A

Where can you use Google Wallet now?

Google states in their FAQ that “currently you can use Google Wallet in-store anywhere contactless payments are accepted, at over 200,000 merchants across the United States.” Wikipedia elaborates: “Merchants who accept Google Wallet include: American Eagle Outfitters, Bloomingdales, Foot Locker, Jamba Juice, Macy’s, RadioShack, Subway, The Container Store, Toys “R” Us, and Walgreens. In addition, Google Wallet works at other participating MasterCard PayPass merchants including 7-Eleven, BP, CVS Pharmacy, Dairy Queen, McDonald’s, Office Max, Petco, Sports Authority, Sunoco, The Home Depot, Tim Hortons, and other retailers.” It will also work with NJ Transit if you live in or travel through New Jersey.

As far as online usage goes, Google provides some examples of merchants which accept Google Wallet – 1800flowers.com, Buy.com, Drugstore.com, eCost.com, and Timberland.com are a few. Google Play, Google+, the Chrome Web Store and Youtube will also allow purchases through this service. In short, you can use it anywhere you see the following logo:

Figure B

Google offers a page which features a “See where Google Wallet is accepted” option you can use to check your area for eligible merchants.

How has Google encouraged people to use Google Wallet?

Google has taken steps to facilitate the use of their wallet service. For instance, their FAQ states “if you’ve ever bought an app or song from Google Play, or if you’ve ever used Google Wallet online, your credit and debit cards will also appear in the mobile app.”

Google provides specific offers (www.google.com/offers) which are tailored to your location (and which do not require Google Wallet). For instance, because I live in the Boston area I can choose from various offers pertaining to local spots:

Figure C

If you select an offer you can then use your mobile phone to redeem it at the location in question (Google states “Google Offers automatically sync to your phone, so they’re always with you”), or print out a voucher. There are also “Featured Offers” which are native to Google Wallet and appear in the Offers tab of the mobile application. These featured offers apply to a few merchants (American Eagle, The Container Store, Jamba Juice and Macy’s) in a few cities (New York, San Francisco, Los Angeles, Chicago, and Washington D.C.) at present.

If you’re interested in the payment processing realm (and who isn’t?), Digital Transactions has an article which describes exactly how Google collects money for purchases made via Google Wallet. The article indicates that “Google can’t make money on payments alone, but must find ways to induce merchants and other parties to pay for the data it will collect through the use of its wallet. Through a program called SingleTap, for example, Google can allow users to redeem targeted offers at the same time they make payments in stores.” This is why Google is motivated to provide these offers and incentives to users and ensure that they’re useful.

Google states that use of Google Wallet does not impede users from earning points through their own credit cards, which can be significant if you have a cash back credit card for instance. This makes sense since items you buy are still charged to your original cards.

According to an article from last August on Digital Transactions, Google “is looking at adding a person-to-person payment capability and allowing users to save credentials other than payment cards, such as transit tickets, boarding passes, and personal IDs.” This is similar to what Apple’s Passbook offers now.

In addition, you can access your Google Wallet account online via https://wallet.google.com/manage to monitor your transactions, set up payment methods, create subscriptions for repeat payments, administer devices and even create merchant reviews. You can return items, and check or dispute transactions.

I set up an account very quickly (linked to my existing Google account, of course) and did not even have to add a credit card number; there is an option to “Add a payment method later” if you’d like to try it out.

I mentioned previously that a physical Google Wallet card will soon be available. Seems odd at first – why use their credit card when your own is perfectly capable? Techradar.com addresses the concept here, stating “users can add credit and debit cards to the Google Wallet app, then use any of the cards to make purchases by using the Google Wallet card.” So when you go to the beach you just bring the one card, presumably. A transit card option may be coming, Techradar states, and “A Wallet card would let owners of iOS and Windows Phone devices utilize a non-NFC version of the Google Wallet app, too.”

What about security and privacy?

Obviously a product like this has to have tight security – forget about eggs; you’re putting all your money in one basket and hoping the Big Bad Wolf won’t come along and lift it. Google addresses the issue of security in the following ways:

  • Cards you keep in your Google Wallet are encrypted.
  • A 4-digit PIN is required to access Google Wallet on a phone. When using it online, a password is similarly necessary.
  • The NFC antenna only works on when screen is on.
  • When you buy items using your phone only the virtual card number Google uses on your device is passed to the merchant – your own credit or debit card isn’t involved at that stage of the purchase.
  • If your phone lost or stolen, you can quickly disable your Google Wallet account via your online account.
  • Purchases are backed by Google’s Fraud Protection Policy.
  • Malicious apps can’t access any data kept in Google Wallet; it is secured at the hardware level.
  • Google Wallet can’t be used on a rooted phone (tech enthusiasts might not consider this a benefit).

As far as privacy goes, the Google Wallet Privacy Notice indicates that this product is subject to the overall Google Privacy Policy. I talked about Google privacy here a few months back. In this context, Google collects information about you to facilitate the conducting of financial transactions using their service. They can share information among affiliates. You can opt out of certain scenarios such as the sharing of your creditworthiness or allowing affiliates to market to you.

What benefits do merchants receive for accepting Google Wallet?

Many of the benefits for merchants are similar to those of their customers; accommodating this service will allow them to get more people buying stuff either in-store or online, and they can profit from the use of offers which will drive sales.

Google does not charge fees for accepting payments via Google Wallet either in-store or online. Merchants can use their existing payment processors or sign on with Google for “as low as 1.9% + $.030 per transaction” depending on monthly sales volume (this rate is available for merchants selling $100K or more per month; the other end of the spectrum involves a 2.9% + $.030 per transaction fee if monthly sales are under $3K)

Of course, for in-store use of Google Wallet, the necessary hardware must be in place. NFC readers are needed along with the infrastructure to complete the transactions at point-of-sale terminals. That’s a consideration each merchant will have to conduct individually; whether the investment in the hardware will yield a compelling return via increased transactions.

How do I get Google Wallet?

If you’re a consumer, you can sign up for Google Wallet using this link. The Android app is available on Google Play.

If you’re a merchant, click here to start the process or find out more information.

That completes our transaction

Google Wallet has had some struggles it will need to bounce back from. A good photo pictorial on cnet.com demonstrates some of the trials and tribulations the reviewer had paying for food, merchandise and services using Google Wallet on an HTC Sprint Nextel Evo 4G Android phone. It shows that in theory the concept is a great idea, but in practice it needs more work.

Google has some slick competition in the payments field. They’ll really have to work hard to differentiate themselves. Right now they’re still a fairly new kid in the neighborhood, holding a new toy and hoping the other kids will come and play. Google will need to add more carriers to the service if they want to stay competitive.

The addition of the physical Google Wallet card can help them here since obviously it is not bound to mobile device limitations. Adding eligible smartphones is a bit more complicated due to the need for NFC/the Secure Element chip, but will probably also need to happen if this service is going to thrive. Also, it’s good that Google Wallet is going to be available for the iPhone, but they’ll really have to make it worthwhile for Apple users to switch from Passbook.

The future may be an uphill climb for Google Wallet, to quote the “Gilligan’s Island” Theme Song. One thing Google has going for them: they don’t have Gilligan promoting the product thereby ensuring it remains perennially stuck on the island.

Click here or watch below for a video demonstration on how Google Wallet works.

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