Google just announced its mobile payments system Google Wallet, which will also be bundled with its Groupon-killer Google Offers.Google wants to put tickets, credit cards, receipts, coupons, and even your driver’s licence in your Google Wallet.
A trial begins this summer in New York, Portland, and San Francisco this summer, with other cities to follow.
It all works over contact-less NFC technology that’s currently available in the Google Nexus S 4G (from Sprint), and coming to other smartphones in the near future.
To pay for a meal at a fast food restaurant, all you’ll need to do is wave your phone in front of an NFC-chip reader. It sounds proprietary, but Google hopes to piggyback off MasterCard’s PayPass system that’s already in effect.
Google’s system will work with MasterCard’s PayPass system, which over 300,000 merchant locations (like every McDonald’s) already has. They hope that by 2014, 50% of smartphones will have NFC chips embedded inside.
When you add credit cards to your Google Wallet, you’ll create a PIN which you’ll need to enter before you pay for anything. Google Wallet-enabled smartphones will have NFC chips in them that are as secure as the kinds used in passports.
Nobody will be able to “scan” your phone and swipe your information, because the NFC chip will only be active once you enter your PIN when you’re standing at a store counter.
Citi, Sprint, and MasterCard are all ganging up to help launch the Google Wallet. The band of companies will help get MOLO (Mobile Local Commerce) off the ground. Also, billboards will have embedded coupons so you can wave your phone in front of them to grab the coupon.
When you use a credit card via Google Wallet, Google will not charge a transaction fee. Instead, it hopes to make money via ads (surprise, surprise) and via Google Offers.
Google will be offering prepaid Google Mastercards which you can re-charge with funds from another card or bank account using an online interface. When you sign up for a Google Prepaid Card, they’ll deposit $10.00 free into your prepaid account, which is a nice gesture.
Google Offers will tie in with Google Wallet, sending you an “offer of the day” that you can take advantage of by paying with your Google Wallet. Your Google Offers sync between your computer and your phone, and will save you money on return visits to a restaurant or store.
As far as retail partners, Macy’s, Subway, Walgreens, and Toys R Us will be the first to support Google Wallet using NFC readers and Offers.
Among others, Google Wallet will directly compete with Serve, American Express’ new service which also offers a Prepaid Card for you to use, and offers easy friend-to-friend payments. We assume this PayPal-type feature will also be implemented in Google Wallet.
Google Offers, on the other hand, is a direct attack on Groupon, LivingSocial, and Foursquare. The Google Buzz debacle is proof that instant scale doesn’t necessarily mean a whole lot if the execution isn’t there, so we’ll have to wait and see how Google manages the launch of Google Wallet.
Since the PayPass infrastructure is already in place, Google needs to make sure that as many new Android phones as possible ship with NFC chips embedded inside.
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