Google Wallet: How it works

20.09.11


Today, Google has launched a new service - Google Wallet, which allows to pay for goods in stores with the help of a smartphone. Of course, it's more the future than the present technology even in US. But it's interesting to see how we'll pay in the future. For a user Google Wallet is a mobile application that is installed on a smartphone. In this application you enter your bank card details (or get a card directly from Google) and add your loyalty cards. Then, with your smartphone you go to the store and when approaching the point of sale, launch the Google Wallet application, enter your PIN-code, select a card, tap the terminal with your smartphone, and ... your money fly to the retailer.

Of course, in order all this work, the following conditions are nessecary:

1. Your smartphone should support the NFC (Near Field Communication) technology - i.e. must have the built-in NFC-chip for secure wireless communications. For now these are only few NFC smartphones, and Google Wallet works only on a single model - Sprint Nexus S 4G.

2. The Google Wallet application must be installed on a smartphone. Of course, Google will have no problem with Android-smartphones but with iPhones and Windows Phones they may have problems.

3. The store should have the NFC-terminal. For while in the U.S. only few retail chains have them

4. The card payment system should support such payments. With this everything is OK. Visa already supports them. Master Card - also, but so far only via City Bank.

5. The mobile operator should support the service to identificate the smartphone, from which the payment is made. While in the U.S. only Sprint works with Google Wallet.

Is it reasonable to replace the bank cards with smartphones, if everything is so complicated?

Yes, paying with a smartphone a little more comfortable than with a card. Because you still carry the smartphone and can leave multiple cards at home.

Yes, paying with a smartphone is safer, because it adds one more security level - PIN-code. And if you lose your phone, you don't need to block the card - you can remotely wipe it from your smartphone.

But the convenience and safety for users - are not the main reasons of why this technology is implemented. In fact, no one asks us. Google and retailers are willing to make large expenses to make us using smartphones as payment instruments.

For Google - it's a great opportunity to collect the data on consumer preferences and then show them relevant advertising. And retailers hope to turn our smartphones into magical devices that generates desire to buy and lets you forget that you have to pay money. After all potentially smartphone can not only pay for goods, but also present a product (when you tap it with your smartphone), notify us about new discounts, sales, etc.