‘Google Wallet’ is the Beginning of the End for Paper Currency and Independence

Google launched its bid to dominate a world where the smartphone has replaced the wallet. Google wants the smartphone to be the wallet of the future, a container for credit cards, coupons, receipts and loyalty cards that can be "tapped" to terminals in stores. Google calls it a "single-tap" solution, meaning shoppers should be able to pay with a single tap of their phone on a payment terminal, or a swipe past it. The Google Wallet will initially work with a MasterCard from Citigroup Inc. and with a prepaid debit card issued by Google, but the intent is to let the wallet accept any card. Google is partnering with Citigroup, MasterCard, First Data, and Sprint, the country's third-largest cellphone company. The other three of the four national cell phone carriers have formed their own consortium, called Isis, to create a wallet that will compete with Google's. Visa Inc. and MasterCard are also planning their own mobile wallets. This announcement is another early salvo in what will be a long and hard-fought battle to change consumers' payment behavior. - Google Launches Trial of Tap-to-Pay Phone System, The Associated Press, May 26, 2011

Google Unveils Mobile Wallet for Smartphones

May 26, 2011

Deutsche Presse-Agentur - Google introduced its mobile wallet platform Thursday that allows users to pay for goods in retail stores by waving their phone near a terminal.

The system will officially launch in August through the company's best-selling Android smartphones, but users in San Francisco and New York will be able to start using the platform sooner in widespread public trials.

The programme utilizes a near field communications (NFC) chip that is currently available only in Google's Nexus S phone, but which is expected to quickly become standard issue in all Android smartphones later this year. NFC chips allow the transmission of small amounts of data such as credit card and coupon information between two devices over small distances.

Google is hoping that Thursday's launch will give it a head start in the race to dominate mobile payments, a sector that is expected to grow to 245 billion dollars by 2014.

Apple is expected to announce a similar system this summer that will run on the company's iPhones, while the major credit companies, Paypal, mobile carriers and independent start-up Square are all working on competing platforms.

'We're about to embark on a new era of commerce where we bring online and offline together,' Stephanie Tilenius, Google's vice president of commerce, said at the press event unveiling the project.

'We believe the shopping experience has not yet been transformed by technology or by magical experiences. Now, your phone can be your wallet -- you just tap, pay, and save.'

Google Tries to Replace Wallets with Smartphones

May 26, 2011

AP - Google Inc. is trying to nudge consumers and merchants into a world where the smartphone has replaced the wallet as the container for credit cards, coupons and receipts.

In Google's vision detailed Thursday, shoppers will touch their phone screen to select a card, then tap the phone to a credit-card reader in a store or restaurant. Google would make money by selling coupons and advertising that come along with the experience.

It's a goal shared by others. The Internet search and advertising company faces tough competition from cellphone companies, payment card issuer Visa Inc., eBay Inc.'s PayPal payment service, and others. All of them want to play the central role of tying together phones, retailers and banks into a new payment system.

This isn't Google's first attempt at electronic payments. The company, based in Mountain View, Calif., introduced an online payment service called "Checkout" five years ago. It hasn't posed a serious threat to PayPal.

Google views its digital wallet as a way to sell advertising at a pivotal moment: when shoppers are in stores, ready to spend money and even more receptive to coupons and other discount offers.

Nick Holland, an analyst at Yankee Group, said that although all parties stand to benefit from Google's system, Google itself has the most to gain. That's because the Google Wallet would allow the company to "own" the market for advertising that's tied to the user's location.

Google said it's launching a Google Wallet trial in San Francisco and New York in cooperation with Visa rival MasterCard and Citibank. It will open up the system to consumers later in the summer. It then plans to expand across the country.

There has been talk of smart payment systems for years, and Google faces the same hurdles that have stifled previous trials.

One is that Google Wallet will initially work on only one smartphone, the Google Nexus S 4G carried by Sprint Nextel Corp. Several smartphone makers, including Research In Motion Ltd., maker of the BlackBerry, are ready to bring out more phones with chips for so-called Near-Field Communications, or NFC, but it's uncertain if they'll work with Google's system.

Another hurdle is getting retailers to invest in terminals that can talk to the phones. Google Wallet will connect only to MasterCard PayPass terminals. There are more than 135,000 of those in U.S. stores and restaurants, but that's only a small fraction of the total number.

Google's carrot is that retailers will be able to put loyalty cards and coupons in the Wallet, helping them track and engage with their customers. Partners in the trial include Macy's, RadioShack, Subway, Toys R Us, Duane Reade and Walgreens.

Yet another problem: Google needs to get cellphone companies on board. Its partner Sprint is the country's third-largest. AT&T Inc., Verizon Wireless and T-Mobile USA, the rest of the four biggest national carriers, have formed their own consortium to create a wallet that will compete with Google's.

The final obstacle is persuading consumers to take the leap. Phones might one day offer slightly faster checkouts, but the benefit would be small. Google calls Wallet a "single-tap solution," but in a demonstration at Thursday at Google's New York office, a Google executive had to tap his phone twice to a terminal provided by retail partner American Eagle Outfitters Inc., then sign on the screen to get a purchase of a pair of denim shorts through.

Osama Bedier, Google's vice president of payments, said it was up to the retailer to decide if the shopper has to sign on the screen.

"Consumers and businesses don't have a compelling need for changes in payment methods," a recent study by the Federal Reserve said. It nevertheless concluded that there are substantial benefits to reap for everyone involved if mobile payments become a reality.

One of the potential benefits is increased security compared to cards with magnetic stripes, which can be copied surreptitiously.

The Wallet will initially work with a MasterCard from Citigroup Inc. and with a prepaid debit card issued by Google, but the intent is to let the wallet accept any card.

"This is about creating a compelling model and asking folks to join," Bedier said.

Banks and payment processors such as MasterCard and Visa like the idea of mobile payments, but have their own designs on the space. Visa already has announced plans for its own wallet. MasterCard is collaborating with Google but is working on its own projects.

"Today's announcement is another early salvo in what will be a long and hard-fought battle to change consumers' payment behavior and, as a potential result, the makeup of the payments landscape," said Forrester Research analyst Charles Golvin.

Google Jumps Into Mobile Payments With 'Google Wallet' and 'Google Offers'

May 26, 2011

Dow Jones Newswires - Google Inc. (GOOG) showed off its plans to create a digital wallet, allowing consumers with Android smartphones to pay for goods and services or receive coupons and offers by waving the device in front of a special reader at the checkout counter.

The Web search giant took the wraps off of Google Wallet and Google Offers, which will launch in the summer. The platform is powered by a technology called near-field communication, now found on some wallets and select phones, which is compatible with newer point-of-sale terminals. Google is the latest company to attempt to make its mark in mobile payments, a potentially lucrative area that has drawn not only traditional banks and credit card companies, but new entrants such as the wireless carriers and handset manufacturers. Mobile payment is attractive because it is seen increasing the rate of purchases by consumers. But the bigger opportunity lies in delivering targeted coupons and advertisements through the technology.

"Google's interest here isn't in the payments, it's in the data that underlies the complete chain of commerce including consideration, promotion, transaction details, coupons, and receipts," said Charles Golvin, an analyst for Forrester Research.

The lure of mobile payments has for years caused a shift in alliances and disputes over how to roll out a broadly implemented system. Google, for instance, has partnered with MasterCard Inc. (MA), First Data and Citigroup (C) to roll out its system. Google is also teaming with Sprint Nextel Corp. (S) as its carrier partner and is using the Nexus S, made by Samsung Electronic Co. Ltd. (SSNHY, 005930.SE), which is equipped with an NFC chip. Sprint sells the Nexus S 4G, which it calls one of its best-selling phones. Verifone Systems Inc. (PAY) is making the checkout terminals, while VIVOtech Inc. is supplying the NFC readers.

Google also listed 15 retail partners, including American Eagle Outfitters (AEO), Macy's (M) and Walgreens (WAG). Google Wallet will begin in New York and San Francisco, and will expand nationally in the coming months. Google Offers, which is a daily discount sent to the phone, will begin in Portland, Ore., New York and San Francisco. The discounts are designed to be redeemed using the phone to pay. MasterCard said there are 100,000 merchants ready to accept NFC payments.

"We have enormous opportunity in front of us to redefine commerce and payments," said Stephanie Tilenius, vice president of commerce for Google.

Tilenius emphasized that the announcement represents the start of a larger roll-out of mobile payments.

"It's important to realize we're just getting started," she said during a press conference on Thursday. "This will take a while to come to fruition."

Users can place multiple credit cards on the phone, and eventually add gift cards. They can also turn the card off to avoid accidentally making a payment. Tilenius touted the system as more secure.

"It's a wallet you can lock," she said.

The platform also allows consumers to create a card on the fly, and will eventually offer the ability to send digital copies of receipts back to the phone. Google is also considering game dynamics, and will allow consumers to tap posters with NFC chips to get coupons. It's all part of what Google calls a "mobile, local" strategy. The vision is to have the phone ultimately store all the info.

Google isn't the only one to dabble in mobile payments. On Wednesday, Bank of America Corp. (BAC), Wells Fargo & Co. (WFC) and J.P. Morgan Chase & Co. (JPM) launched a service the lets people use their checking accounts to send each other money with an email address or cellphone number. Bank of America is also undergoing a trial with Research in Motion Ltd.'s (RIMM) BlackBerrys and MasterCard.

"This is truly transforming the shopping experience," said Ed McLaughlin, who runs emerging payments for MasterCard.

The other three national wireless carriers, meanwhile, have banded together in an initiative called Isis, with plans to test its first mobile-payment system in Salt Lake City early next year.

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