Five common questions about Google Wallet answered

Google has entered the highly competitive electronic payment market with Google Wallet. Kevin Purdy answers five common questions about it.

Google is an online company, but it has ambitions to get close to your interests in the great big offline world too. With the over-the-air launch of Google Wallet for the Sprint Nexus 4G, they're taking a bold stride toward becoming a carrier and value holder for your everyday gas, food, and other transactions.

It's a big idea with a simple application: waving your phone instead of swiping a card. Using a chip in the phone embedded with Near Field Communication (NFC), Google Wallet connects with a kiosk or mat put out by the retailer, the customer enters a PIN to authorize the transaction (and prevent accidental hip-bump purchases), and Google Wallet ferries the money to the banks and credit processing entities on each side. Google gets no cut of the deal, but they do have a chance to place ads on the transaction screen (if a retailer approves), to promote and sync up their Groupon-like Google Offers, and to link Android owners even more tightly to their web-connected phones.

Here's a few questions answered about how it works now, and how it might gain a foothold in a very, very competitive space.

What do I need to use it?

At the moment, Google Wallet is being pushed as an update to owners of the Nexus 4G phone on the Sprint network, with more phones to follow. For those Nexus 4G owners who want to use Google Wallet as a regular payment method, they'll need a MasterCard issued by Citibank. Google states all over their Wallet materials that they're working with Visa, Discover, and American Express as "future partners," and that they intend to create an open ecosystem that's inviting to all partners. Visa, in particular, announced that they had licensed Google to use the credit firm's "PayWave" system, but didn't state when that functionality would be up and running.

Those who have the right phone but not the right card can purchase a Google Prepaid Card from inside the Google Wallet app, which works just like any pre-loaded credit card. Google's even adding a free $10 credit to each customer's first Prepaid Card purchase.

Where can I use Google Wallet?

Now the Wallet use cases narrow even further, though not by as much as the Nexus 4G requirement. You can use your Google Wallet anywhere you see the MasterCard PayPass logo. From this author's casual observation, that generally involves chain retail locations: gas stations, fast food and casual restaurants, and a good number of stores with national reach. Taxicabs and Walgreens locations are included, too, according to Mashable, and American Eagle Outfitters. Google tested its Wallet program with its own staff in New York and San Francisco, so presumably you can find a good sampling of Wallet-accepting spots in those cities.

There are already competitors though, right? I swear I've seen wave-able payment systems

It's a very active space right now. Companies like Square, Venmo, and PayPal are already competing to be the most convenient middleman in the mobile payment game, and the many, many players in the transaction process are all making moves to not be cut out when customers start getting comfortable paying with a phone.

You've probably noticed that both MasterCard and Visa already had their own tap-to-pay systems installed on certain cards and near cash registers. But it seems that Google Wallet will integrate with, rather than replace, those systems.

My phone is in my pocket. My wallet is in another pocket. What's the benefit of using one over the other?

Google gets this very basic question, and mainly offers its mighty cash reserves and network connections as an answer. Every Google Prepaid Card buyer gets a $10 balance upfront. Buyers of Google Offers will see those offers automatically put into play when using Google Wallet at that merchant, unlike rival Groupon, which requires cashiers to type in a code or scan a phone or print-out barcode.

And over time, you can imagine Google using the phone's geo-location tools, Google account syncing, and other connections to make Google Wallet a smarter kind of payment system. Got two albums by a favorite artist on your phone? Maybe you'd be interested to know that a store sells their other work. Visit a lot of Chipotle locations and check in on Google+? Well, guess which chain is offering free chips today?

Could Google Wallet ever make its way into the enterprise/Google Apps realm?

If Google Wallet gains acceptance among the other card issuers, one could see Google Wallet offering a mighty incentive: better, nearly automatic expense report tracking. Rather than keeping receipts, filling out forms, and shuttling them over to accounting, a corporate-connected Google Wallet could automatically create reports, track locations, and offer other incentives. It could be enough of a hassle reducer to entice both the spending employee and the tab-settling employer to replace, or at least augment, their traditional plastic.

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