Google Wallet Lets You Tap and Spend

Google's smartphone payment app, Google Wallet, has brought the ease of paying for goods with the tap of a phone to America.

This first rollout works great, but only if you can receive the over-the-air update of the app to a Nexus S 4G smartphone from Sprint. Then you need to find a store with a MasterCard PayPass payment terminal, which initiates a funds transfer from your credit or debit card when you tap a phone on it.

The Nexus S has a built-in near-field communication (NFC) chip and is equipped with special security technology, which makes it capable of safely supporting the short-range radio communications necessary to make in-store payments. In the future, NFC's two-way capability will allow Google and other companies to send coupons and special offers to Google Wallet users.

Google Wallet Lets You Tap and Spend
Since Google rolled out the app gradually, I had to wait five days to receive Google Wallet over the air in a 14.3MB update labeled Android 2.3.7 to a Nexus S 4G phone.

Once the app was loaded and initiated with a secure PIN that I created, I set out to find a store near my home in Virginia that accepted Google Wallet payments. Even though Google's website listed dozens of stores in my ZIP code that would accept Google Wallet, I had to go to five stores before finding one with a terminal that would accept it.

But the effort was worth it. When I made my first payment with a touch of the Nexus S to the terminal on the counter at my neighborhood McDonald's on Monday afternoon, the teenager selling me my grilled chicken sandwich and Coke for $6.42 exclaimed: "Wow, that's a cool phone! What phone is that?"

His boss seemed skeptical that I had actually paid, however, until my paper receipt spilled out of the register. She grabbed the receipt, examined it, and gave it to me with a grunt, while the teen smiled broadly and handed me my lunch in a perfectly folded paper bag with the send-off, "Thank-you, Mister!" (By then, it felt like I was in a Mickey Rooney movie.)

I was pretty pumped, too, which seemed silly, given all the amazing early adopter technologies I've seen over the years. Still, I went to the CVS across the street to make sure my first success wasn't a fluke. It wasn't. I easily bought a bag of M&M's for $1.22 with Google Wallet on the Nexus S. The young clerk said, "I've never seen that before, very cool."

Google Wallet Lets You Tap and Spend
In each case, I touched the back of the phone to the terminal near where the PayPass logo was located, and was then prompted with a slightly audible sound to input my four-digit PIN on the Nexus' touchscreen. Once I input the PIN and again touched the phone to the terminal, I got another audible indication that my payment was made. I also received a short text message on my phone saying the payment was complete, although the tiny text was hard to read.

I admit I never really felt like I'd paid, however, until a clerk in each venue carefully looked over the receipt. I also checked the receipts myself.

We in the U.S. must seem like dinosaurs to the South Koreans and Japanese, who for years have used NFC-ready smartphones to pay transit fares and make quick purchases at drugstores and newsstands.

With the introduction of Google Wallet, Google is first-to-market with an NFC payment system in the U.S., and the company seems to understand that it will take a while for the technology to mature.

Google was smart to start small, working with just one phone, (the Nexus S, for now), one carrier, (Sprint, for now) and one credit-card processor (MasterCard). According to Google, MasterCard has "hundreds of thousands" of PayPass terminals that will work with Google Wallet. Other major credit-card processors are also licensing their technology to Google Wallet, but those systems won't arrive till sometime in the future.

Citigroup will also provide Google Wallet users with its Citi MasterCard, but Google wisely started the rollout with its own Google Prepaid Card, which users can load with funds from other cards or sources.

If that weren't enough inducement to attract early adopters, Google also decided to give each Google Wallet early adopter $10 on the prepaid card as mad money. Full disclosure: I owe Eric Schmidt a Coke, a grilled chicken sandwich and M&M's. (I still have $2.36 of the $10 left to spend.)

As another possible inducement, Best Buy over the weekend lowered the price of the Nexus S 4G on Sprint to nothing for customers who sign up for a standard two-year service contract. Users can presumably take the $100 or so saved on the phone and load it on a prepaid card.

Before I go overboard listing amazing qualities of Google Wallet, I'm going to have to see what fees, if any, I'll be charged for each transaction. Right now, the biggest fees for credit cards users are paid by merchants, even those that have nonetheless embraced Google Wallet as a way to speed up lines at the cash register or to engage customers in loyalty programs.

Google Wallet Lets You Tap and Spend
Cynics have said that NFC smartphones are no better than NFC-based smartcards, which can be used at the same payment terminals to pay for purchases via credit or debit card accounts. But smartcards are one-way tools -- shoppers can only use them to make payments -- while smartphones will also be able to receive special offers (which will be based on users' shopping histories and current locations). If retailers do start to send coupons and otherwise offer special deals to people who pay with their smartphones, demand for NFC-ready devices could jump.

Avivah Litan, an analyst at Gartner, said on Monday that she has recently helped prepare a new consumer survey that confirms that consumer acceptance and interest in mobile payments is "still very small" in the U.S. That low level of interest means Google will have to make sure the customer experience with Google Wallet is superior if it hopes to see further adoption, she said. That means there should be no problems in getting the Google Wallet update to a phone, and no problems in finding eligible stores or making payments work.

Two other analysts said Google Wallet is still in its infancy and is bound to grow steadily. Competing mobile payment networks are also in the works. One of those is Isis, which is backed by the other three major U.S. wireless carriers, AT&T, Verizon Wireless and T-Mobile USA.

Mark Hung, an analyst at Gartner, said Google Wallet in its current form is probably a beta version, even though Google didn't launch it with the "beta" moniker.

"Google couldn't put 'beta' on Google Wallet because with payments, having that label would scare people away," Hung said. "However, in reality, Google Wallet's maturity at this stage is probably the same as any other Google app that was in beta before, including Gmail, Google+ and more," Hung said.

Google officials wouldn't respond to requests to comment on the success of the Google Wallet launch or how many phones have the app installed. Sprint referred questions to Google, and MasterCard didn't respond to a request to comment.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt's RSS feed . His email address is mhamblen@computerworld.com.

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