Google's NFC-Powered Digital Wallet: Room For Your Shopping Lists, Credit Cards ... And Complete Trust

Square's gone after the clunky old cash register. Now Google's trying to reinvent how we pay for even more things. It's just revealed Wallet, the first big-name, large scale rollout of NFC wireless wave-and-pay next generation credit cards.

Google Wallet

We'd heard several rumors, each adding a little detail, but now we know it all: Google's just revealed its digital Wallet solution, based on near field wireless tech in its Android-powered smartphones. It's not just about reinventing the good ol' plastic magnetic strip credit card, it's actually about changing nearly everything about shopping—"tomorrow's next best shopping experience." It's a partnership with Mastercard's PayPass system, with Sprint and Citibank along for the ride, and it should be a workable solution all around the world for users, wherever PayPass is accepted.

Over 70% of people use their credit cards online for shopping, said Google's VP of Commerce Stephanie Tilenius, a situation radically different from just a few years ago, but e-commerce is still just 8% of overall retail even while it's due to surpass a trillion dollars in 2013. Real store shopping rules the roost, then, but actual shopping is just not a "magical experience" and needs rebooting.

Google's idea goes beyond replacing a credit card in your wallet with a wireless system in your phone—tallying with everything we've predicted about NFC-enabled shopping. Wallet, Google hopes, and the accompanying Offers system is "mobile, local, personalized, serendipitous, and open." Giving an example of walking into a grocery store, Tilenius demonstrated that a Google Nexus S phone could pop up a grocery shopping list because it's detected where you are. When you'd collected the goods, you'd pay at the checkout merely by tapping your phone to the sensor, and the transaction happens instantly, along with loyalty point awards and so on.

The system supports multiple cards (by default Citibank to start with) but there's provision for other providers cards which are all securely stored along with PIN data, and there's also a Google pre-paid credit card which you can "top-up" by using other payments systems. Special offers are also targeted at you, based on your previous shopping history at the store—a trick which leverages Google's vast databases and expertise in targeted advertising—and ultimately Google thinks you'll put "everything" in its Wallet, including digital editions of your driving license and car keys. Google stressed this is a real system, not a proof of concept, with over 300,000 PayPass installations and retailers integrating the tech right now. (Jack Dorsey, are you listening?)

And then comes "Offers," a system to partner the Wallet and add in the extra functionality that makes it a real reinvention of shopping. Offers has been around for a few months and is, basically, Google's attempt to steal Groupon's—and maybe Facebook Deals'—business. While much of clients' interactivity with Groupon happens at home, on a PC with printouts for vouchers and so on, Offers is going to be more about being mobile and tapping into the rich data stream generated by your shopping habits—Tilenius noted Offers would be delivered as a daily email (very much like Groupon) but also through apps. And unlike Groupons coupons it all happens in a single move when you pay for the product you're saving cash on, via Wallet. Plus, as Google demonstrated onstage, there are novel new shopping ideas enabled by this system, like NFC-tagged posters which you'd tap your phone on to collect a coupon.

To appease security and privacy worries, Google's Nexus S phone has a hardware level secure encryption chip, and to prevent your card data from being scanned just when you're walking along (a very 21st Century version of pickpocketing) there's no transmission of your data until you're at a cash desk and have "unlocked" your Wallet app. How this translates to Google's plans to make Wallet "open" for other systems to interact with, we're not sure.

And, again, it's likely no accident this all comes on the heels of Square's upgrade. And we could always speculate that Google's announcement on an average May day has something to do with Apple's plans for NFC in its upcoming 2011 smartphone, plans we can only guess about.

Update: As part of it's Q&A session, Google's confirmed that field trials of Wallet will happen in New York and San Francisco before a bigger roll-out, and you can sign up at the Wallet website to learn about availability. It's also highlighted that it's taking a back-seat role in the transactions, and never gets your credit card details—that all happens between you, the retailer and your bank.

Plus you actually don't have to have an NFC phone to use the free Wallet app...which leaves us bemused as to how that tech will work. That won't be too much of a problem for long, because Motorola, HTC and Samsung all have Wallet-compatible NFC phones on the way.

Launch retail partners include The Container Store, Bloomingdales, Subway, Guess, Footlocker and others using Google's "SingleTap" system, and Coca Cola, CVS Pharmacies and a few more using PayPass.

Chat about this news with Kit Eaton on Twitter and Fast Company too.

Add New Comment


  • John Duffy

    Good article. The big issues not covered are hardware at the stores, transaction values allowed and cost to a merchant. Costs to a merchant include additional delay time. Is there no mention of VISA? No mention of regulation? Which Fund Supply will the wallet call upon for each transaction? Will Google control the wallet as well as the search.....this has also implications for Online Commerce. Will there be enough issuers of Contactless Paypass cards? If the Banks/Merchants are not going to fund EMV chip to get rid of fraud what is the business case to add contactless reader devices? The technology is great but the business model is fuzzy :-)

  • StPete

    Why is any of this better than Square?  
    With this "wallet" I see loads of gimmicky opportunities for bank ads, coupons, other band sucking aggravations, but in Square I just slide a credit card and get my money.  

  • Rahul Aggarwal

    The Google’s step towards a open commerce ecosystem is going
    to draw a lot of attentions from the retailers as they get a new way to target
    their potential customers and also increase the buyer population. However, the
    geotargeting option might be a safeguard measure to save the public from
    privacy intrusion. 

  • Rangaprabhu Parthasarathy

    Google has NFC baked into its OS for the last 6 months. There are 2 phones (one of which is over 7 months old) that have an NFC chip built in.They have been rumored to be working on a full fledged system like the Wallet for the last 3-6 months. I am pretty sure they are doing this without Apple on the radar. Apple, when it does release an NFC solution with its iPhone will surely do a great job. But to belittle Google's efforts doesn't give your article much credibility. 
    If anything, Apple's NFC solution will be late to the party. 

  • Kit Eaton

    Hey there. Hmm.... did you read my article? I think Google really may have *changed shopping.* You can't get more positive than that can you? Plus we've written about Google's pro-NFC stance for months, and it's truly exciting (possibly more exciting than Google's presentation made it seem). 

    Apple gets a mention in there because its own plans for NFC shopping, which it has tried to protect with numerous patents, are actually even more sophisticated in outlook than Google's are. And while Android sells more units, not all of them will sport NFC hardware--whereas if Apple slots it into the iPhone 5, tens millions of the units will have the hardware.