Google Wallet

Merchant Warehouse |

January 16, 2013

Google Wallet is a mobile payment system, first demonstrated in May 2011 and released in September of that year, that allows users to store credit and debit card information and make payments through near field communication (NFC) technology. Through the MasterCard PayPass system, more than 300,000 merchants accept contact-less payments with Google Wallet.

Technology

The core of Google Wallet is a free mobile app compatible with mobile devices that feature NFC capabilities and special Secure Element chips to encrypt financial information. NFC provides the secure wireless connection that allows transactions to be completed with no need for a touch or swipe. Google Wallet links to the user's existing credit or debit card accounts and allows payments to be made using any card. In general, the technology does not share linked information with merchants; only the virtual prepaid MasterCard card that comes with the virtual wallet is shared.

Carriers and Partners

Originally, Google Wallet launched with Citi as the issuing bank and MasterCard as the payment network. It has since expanded to link to all major credit cards, including American Express, Discover and Visa in addition to MasterCard.

Google Wallet uses the Sprint network, and all compatible mobile devices have Sprint or an affiliated network as the carrier. Google plans to expand the system to other major carriers and to offer a physical card to enable Wallet acceptance at merchant locations that lack NFC technology.

Security

In addition to requiring a standard personal identification number (PIN) like most debit cards, Google Wallet has several extra security measures. The app encrypts private user information on a special computer chip, the Secure Element, and requires an extra PIN to activate the NFC antenna. The NFC signal must be in close proximity to an NFC reader to be received, and the antenna shuts off automatically once the transaction completes. Furthermore, actual credit and debit card information is typically insulated behind the virtual MasterCard information. Users can use a PIN to lock the Android smartphone itself for added security in case the device is ever lost or stolen.

Criticism

According to the security company viaForensics, some financial information is still accessible outside the Google Wallet app. Although a number of potential security exploits present in earlier iterations have been fixed, studies suggest that hackers could still find a way to intercept data via Google Analytics, which monitors and stores information on app usage.

Offers

Google Wallet gives users access to a range of special offers and virtual coupons in addition to mobile payment options. These Google Offers include discounts on products and services and, in most cases, can be redeemed by displaying the virtual coupon to a cashier. Depending on the merchant, the coupon may be scanned or manually entered. Certain merchants with Google SingleTap technology can accept payment and redeem offers in a single step. Offers fall into two categories: today's offers, which give the user access to a single redeemable offer in his or her area, and nearby offers, which present a list of local discounts in the Eat and Play categories.

As Google does not presently charge users for access to the Google Wallet app, the system's primary means of making money is through sponsored adds.

Sources:

http://www.itworld.com/mobile-wireless/248596/even-after-rewrites-google-wallet-retains-gaping-security-holes-mainly-due-an

http://lazytechguys.com/news/google-wallet-to-work-with-non-android-phones/

http://www.google.com/wallet/

http://www.businessinsider.com/google-introduces-google-wallet-works-with-mastercards-paypass-2011-5?op=1