Google Wallet

Despite all the legal battles, Google Wallet has an available “nuclear option” if it is not allowed to use the hardware secure elements on Verizon phones. Though GlobalPlatform – the not-for-profit that establishes protocols and guidelines for making NFC payments – has determined that secure elements are necessary for financial security, Google Wallet could simply use virtual secure elements stored on the cloud. A U.S. startup called SimplyTapp has been developing this approach since 2005, and it would completely divorce sensitive payment information from any hardware secure element on the phone. Would Google ever pursue this option? This is not clear – though they don’t currently have the formal support of AT&T, T-Mobile or Verizon, their carrier partner Sprint is still the third largest MNO in America. Opening up secure elements to the cloud would open up a Pandora’s Box – allowing competitors like Square or PayPal to flood the market for NFC apps, now no barrier exist to prevent them from accessing NFC.

FINANCIAL DETAILS

Google Wallet is in direct collaboration with Citi as the issuing bank, MasterCard as the payment network, and Sprint as the mobile carrier service. First Data acts as the card processor and handles authorizations. Additionally, Google Wallet has a licensing arrangement with Visa for their PayWave system. In 2012, Google Wallet expanded service to accept all major credit cards and include some Virgin Mobile Phones.

Google Wallet is accepted at any location which accepts MasterCard PayPass and Visa PayWave. 120,000 merchants nationwide accepted Google Wallet as of May 2011, and over 300,000 merchants accept it today.

NETWORK DETAILS

Also unlike ISIS, Google Wallet was designed as an open platform. Similar to Dwolla, the hope is that eventual developers can take the core API and cater it to individualized needs while still using the Google Wallet platform for NFC payments. However, this open platform idea is similarly developing and subject to change as no public API has yet been circulated.

WEAKNESSES

Google Wallet and ISIS both require collaboration between multiple parties to work effectively: credit card companies, mobile phone manufacturers, networks carriers, merchants and consumers. While Google Wallet has taken a versatile approach towards credit card companies, by essentially partnering with all of them, ISIS has the advantage in terms of phones themselves. In other words, consumers that want to use Google Wallet are restricted to a few models of Sprint and Virgin Mobile phones. ISIS users, on the other hand will have a larger selection of hardware they can turn to for NFC capability. This may force Google’s hand into adopting a revenue sharing model with carriers to stay active.

FINER POINTS

Can I use NFC to send money to friends (P2P)?

Currently, all the hardware exists for this to happen and the only factor missing is an app or platform that would facilitate this transaction. Additionally, issuing banks would have to be in agreement about how the money gets transferred and their share in the transaction. There have been no attempts of creating a platform for peer-to-peer from Google Wallet or ISIS.

Why not let the telecoms distribute NFC on their SIM cards?

For mobile network operators, the obvious choice would be to store secure elements on the SIM card. This would give them most proprietary control over the use of the secure element use and allow their customers to maintain their payment cards on their SIM when upgrading their handsets. However, because of difficulties in adapting current NFC technology to SIM cards, this option is not widespread.

Why not let individuals buy their own NFC-enabled SD cards?

Storing NFC technology on a SD card would be the most “open” option available and allow backwards compatibility with old smartphones. However, this option has its own difficulties – for instance, it might be a hassle for consumers to seek out the new technology and also requires them to have an open slot. Additionally, who would pay for the SD card; the consumer or the issuing bank? Because of these problems, the NFC on SD card solution has not widely been used either.

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