Google Wallet: First Impressions

Google officially rolled out its Google Wallet mobile payment system on Monday. We’ve been using a Sprint Nexus S 4G with Google Wallet for the last six weeks. Google Wallet is still in its infancy, but the system already shows a lot of promise.

Right now, Google Wallet only works with Citi-Mastercards and the Google Prepaid Card. Visa and Google announced a worldwide agreement to support the Visa payWave app, but it will still be up to the financial institutions and banks to add support.

Types of Mobile Payments

Over the last six weeks, I’ve used Google Wallet at a variety of locations around New York City. Thanks to its partnership with Mastercard, the NFC chip built into the Nexus S 4G works with any of the thousands of PayPass merchants. This means that if you are in a taxi cab or at Walgreens, you can just tap or wave your phone to make your payment.

The “tap and pay” method of payment is cool, but the Google Wallet feature that has the most potential is what Google is calling SingleTap. The SingleTap experience means that users can combine their coupons, loyalty cards and payment method all with one tap.

Google showed me a demo of the SingleTap payment using one of Macy’s POS terminals and the results were impressive. Using the Google Offers app that can save coupons directly to Google Wallet for Android, you can make a payment with your default payment type, apply the coupon you have saved and also apply the purchase to your loyalty card for that store. It’s a seamless process and it offers tangible value over fumbling through various cards.

Using Google Wallet

I’m the type of person that never goes anywhere without my phone. In fact, I’ve recently started using a phone case that doubles as a wallet. For me, the value proposition of not having to carry around various credit cards and instead just use my phone makes a lot of sense.

If you have never used NFC-enabled devices, it can take a bit of getting used to. The way Google Wallet is set up, it only works if the screen is on and unlocked. If you haven’t used your wallet within a certain period of time, you will also be prompted to enter an unlock code before using the app.

We’ve discussed the security behind NFC systems in the past, and Google has created its own Secure Element that adds an additional layer of security. Google hopes to make this Secure Element an accepted standard within the NFC space.

I liked the process of using Google Wallet. The one frustrating aspect was that my day-to-day credit card, my Bank of America Visa checkcard, couldn’t be tied directly to the system. I do have a Citi-Mastercard and that worked seamlessly with the system (after calling Citibank to get the card activated for use with Google Wallet), but having to use the Google Prepaid Card added an additional layer of complexity that just wasn’t worth the hassle unless I knew I was going to be buying something in advance.

Privacy, Google Offers and More

A big question that many would-be users are sure to have about Google Wallet is “does this mean Google knows what I buy.” The answer, at least right now, is no. Google does record local transactions on your phone, but these transactions are only identified by amount and location and are only viewable to you.

In practice, this means that if I look at my Google Wallet history, I only see a date, an amount and an approximate location. Google says that it is working to roll out a more robust digital receipt system in the future.

I appreciate the concern for my privacy — and I certainly do NOT want my purchases being tracked (aside from how they are already tracked with existing loyalty card programs) — but a big disadvantage, at least right now, of the Google Wallet is that receipts are still printed. When I can have access to all of my receipts within the Google Wallet app, that will make the system that much more useful.

The biggest opportunity we see, right now, is for Google Offers. Google Offers as an app is a nice way to browse for deals, specials and coupons. You can clip those offers digitally to Google Wallet and then show the coupons at merchants, whether they are NFC-enabled or not.

The potential for the deal discovery space, especially with the addition of geolocation, is something I have been waiting to see take off for nearly two years. Google is being very cautious to make its experience as low-friction as possible. However, with the right tweaking and perhaps with greater social integration, a la Google Places and Google+, this component could really separate Google from the pack.

This is Just the First Step

With the announcement that American Express, Discover and Visa have all licensed their NFC technologies to Google, the next step is to get the thousands of financial institutions and merchants on-board with an NFC system.

Meanwhile, the NFC space is highly competitive. Visa has its own mobile wallet initiatives, as does American Express and PayPal. We’re at an interesting place in the market; we’re finally at a point where lots of activity is happening in this space and mainstream adoption seems closer than ever, yet these competing solutions complicate short-term adoption.

Google’s approach is to create a platform that it wants everyone else to build on. That’s the general message the company has presented to me in regards to Google Wallet. It wants things like the Secure Element and the way it is being used by point-of-sale systems.

Interestingly, this is a similar game that competitors are taking too. Visa, for example, is licensing its technology to Google while developing its own platform. When I spoke with Visa last month, the company told me that its goal was to be wherever consumers want to make payments. That’s a vision shared by many of the major players in the payments space.

Google Wallet’s challenge will be to differentiate itself in a burgeoning market. This is just the beginning of what is sure to be a major technology story within the next 18 months.

Let us know what you think of NFC, Google Wallet and the future of payments in the comments.

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