Is Google Wallet an Idea Ahead of Its Time?

Following the spectacular failure of the over-hyped Google Wave, executives for the search engine are painfully aware that just because they build a technology they feel is cool and cutting edge, people may not flock to use it, analysts agreed.

That’s a big reason why the executives leading the Google Wallet mobile payment effort, which is launching in New York and San Francisco this summer, were careful not to call their shot a home run.

Google Wallet is to date the most comprehensive stab at cracking the mobile payment code in the United States. Consumers must purchase Sprint Samsung Nexus S 4G smartphones, which are equipped with Android 2.3 "Gingerbread" software, which has native support for NFC (near field communications) wireless technology.

Nexus S 4G owners can then download the Google Wallet application from the Android Market, and provision either a Citi MasterCard or Google prepaid card to the app and the NFC chip on their phone. Consumers may then tap and pay for goods on special, NFC-enabled point-of-sale terminals in more than 124,000 retailer stores that offer MasterCard’s PayPass service (311,000-plus worldwide).

Early retail partners for Google Wallet include Subway, American Eagle, Radio Shack and Toys "R" Us. With Wallet available on only one smartphone from the nation’s third largest wireless carrier, it’s fair to ask what the incentive is for using such a service.

Aside from the typical loyalty offers shoppers may accrue from using Wallet at these locations, Google is pairing Wallet with Google Offers, a Groupon-like local deals service. Consumers may scan coupons into their smartphones and sync them to Google Wallet for redemption at the same PayPass locations.

There is a lot to like about the service, and some consumers may be ready to leave their physical wallets at home and pay by phone. Still, it’s not clear enough people are willing to try Google Wallet.

Omar Bedier, the vice president of payments who Google (NASDAQ:GOOG) lured from PayPal to build Google Wallet, acknowledged mobile payments have long faced the "chicken and egg problem of how many phones are there with NFC and what can you do with them."

Analysts agree.

"I’m not convinced the mainstream consumer is ready for payments via their phones," industry analyst Jack Gold told eWEEK. "We consumers currently have so many different options, it’s getting overwhelming. I think the major issue consumers will need to overcome is trust. It’s not so much about the technology as it is about who do I trust to be my credit authority. Is it Google? Is it the carrier?"

To Gold’s point, all credit card information is stored on the secure NFC chip, which is designed to self destruct if someone toys with it. In the event of a lost phone, Google and its partners can deprovision all credit cards stored on the chip. s of the token as well as indirect costs such as overhead, support and shipping.

For more, read the eWEEK article: Google Wallet Play Fraught with Skepticism.

CIO Insight Staff
CIO Insight Staff
CIO Insight offers thought leadership and best practices in the IT security and management industry while providing expert recommendations on software solutions for IT leaders. It is the trusted resource for security professionals who need network monitoring technology and solutions to maintain regulatory compliance for their teams and organizations.

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