Mobile Payments: Is the Convenience Worth the Risk?

August 11th, 2011 by Brian Oliver Bennett, LAPTOP Senior Writer

Google’s Mobile Payment Move

Google is undeterred by the hurdles to deploying retail NFC technology. The company started rolling out its own mobile payment service, called Google Wallet, this summer. First, Google Wallet will be field-tested in two urban markets, New York and San Francisco, with plans to bring the service nationwide as quickly as possible.

Google’s partners include large financial institutions Citigroup and Mastercard along with such retail merchants as American Eagle Outfitters, Bloomingdales, and Macy’s. Duane Reade and Walgreens are also participating, as are Peet’s Coffee & Tea and Subway restaurants. Another key partner is Sprint, which sells the Samsung Nexus S 4G smartphone with NFC capabilities.

Here’s how Google expects its Wallet app and service to work: A customer who owns an NFC-equipped handset, such as the Nexus S 4G, will download the Google Wallet app. Clicking the app’s W-shaped logo opens the software and starts the setup process. Users have the option to add two payment methods to the wallet: either a Citi Mastercard that is PayPass-enabled (PayPass is Mastercard’s marketing term for its implementation of contactless technology) or what Google calls a Google Prepaid card.

The Prepaid card is essentially a virtual way to store funds within Google Wallet without needing to own a PayPass Citi MasterCard. At launch, the Prepaid card will come with an initial balance of $10, which users can top off with the credit card of their choice.

In an effort to lure potential customers to Google Wallet, the service will also offer some key features to enhance the shopping experience. The first enticement is support for loyalty cards, so if you use your phone to shop at a participating store, purchases are automatically tracked against that merchant’s program. In a nutshell, the app will remember how many cups away you are from a free latte.

Offers and coupon features are also built in, aggregated into a My Offers area. These offers or special discounts come in three forms, the first being tied to Google’s Place Pages, listings for businesses such as restaurants or retail stores that show up in Google searches. The second type of offer are ads that appear when users conduct Google searches, which can be saved for redemption later.

The most high-profile initiative is the Google Offers service, currently in beta. Tied to a person’s location, Google Offers will highlight nearby deals of the day. According to Nate Tyler, primary spokesperson for Google Wallet, these abilities add up to a real benefit for the consumer. “We’ve outlined a scenario where a person can easily spend, but also redeem, loyalty points and coupons or offers all at the same time,” Tyler said. “This keeps them from having to store all that information in their wallet and goes beyond what a traditional card can do.”