It looks like Google is taking on credit card business by adding in wireless payment tech to Android smartphones. It's arguably a response to Apple's bold iPhone plans, but Google will have to navigate Apple's numerous patents in this area.
According to the usual people "familiar with the plan," speaking under condition of anonymity, Google is working hard to bring NFC payment tech to its smartphones with a potential debut sometime this year. Last year Google bought up Zetawire, a Canadian firm with clever (already patented) ideas about combining cell phone payment systems with a digital loyalty card scheme, and it looks like Zetawire's tech would marry well with an Android-based wireless credit payment system. We also know that Google is keen on this sort of technology since some of its interesting QR-code Google Places tags stuck in businesses around the nation are also embedded with NFC (Near Field Communication) tags that can be read with the appropriate tech—including the recent Samsung Nexus S Android smartphone, which is a flagship technology testbed.
The idea is simple—instead of plopping down a plastic credit card embedded with a frail and easily copied magnetic strip (or more sophisticated embedded silicon chip in places like Europe) and then signing your signature, or tapping in a PIN you'd simply place your phone on a payment pad. The cash register communicates wirelessly with the phone using NFC, and then you confirm your ID in some way, probably using a similar PIN system. The transaction could be much faster and more secure, and allows for all sorts of extra benefits—such as simultaneous loyalty card point crediting, or transfer of adverts, coupons or even apps to your smartphone.
But Nokia's building in NFC powers to every smartphone it's making from 2011 onwards, and Visa and Mastercard are desperately trialling wireless payment systems in what some call a "land grab" in this nascent industry. Wells Fargo is even trying to persuade its workforce to try out NFC payments with smart microSD cards in smartphones, and a trial scheme with stores in the San Francisco area.
And potentially leading the pack is Apple. It has filed numerous patents in the field of NFC tech, with the goal of reinventing the way you buy concert tickets, the way you engage in transactions at a cash register, and even the way you extract cash from an ATM. Apple's ideas include instant ad-serving to NFC phones, and clever identification processes (like "signing" your signature with the corner of your iPhone) that boost the security of the purchase. The patenting seems to be so aggressive we'll be surprised if the iPhone for 2011 doesn't include advanced NFC tech.
And while Google's Android is selling fast, Apple still has the technological lead in the new smartphone game—and it has the negotiating skills to reinvent a whole industry, which it's done several times already. NFC tech is already commonplace in some places, including Europe and Japan, which would let Apple test its plans with a public which is already used to using wireless payment schemes (for Metro tickets and so on).
To make a success in this game Google will have to tiptoe through the patent minefield that Apple and Nokia have laid out, compete with the innovation and market dominance of these two companies, and sell the tech to a public that's already wary of how much info Google gathers about people (a data pool that would get a serious boost from a mobile payments system). One thing Google does have, to compete with the millions of payment details Apple has stockpiled in its iTunes client database, is that you can sometimes pay via your cellphone carrier for Android purchases. Is this enough of an edge?
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