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.