Google Wallet: Does First to Market Guarantee Success?
The Google Wallet is really the first major exposure that the public at large will have to Near Field Communication or NFC chip payments. EMV or NFC chip payments are widespread in Europe, Canada, and now Mexico. The popularity of Near Field Communication devices is growing rapidly and now the major payment brands (Visa, MasterCard, American Express, and Discover) are making a push for the American banking system to adopt the technology. This is due not only to the much greater security levels against credit card fraud but to the wide variety of applications that NFC has for the consumer and business owner alike. NFC technology goes way beyond payments but allows for value added services such as marketing and customer loyalty opportunities.
What is the Google Wallet?
On September 19th 2011 Google released the Google Wallet after extensive testing. To sum it up the Google Wallet is a free application allows consumers to enter their payment card information securely into their phone (equipped with an NFC chip). Then to pay for goods and services they will simply type into their cell phones a phone number and PIN number at the point of sale and “waive” their phone over a “card reader”. The transaction is processed by your merchant services credit card processor just like a normal credit card payment. This mobile payment system has quite a few benefits some of which are:
1. Eliminates the need for consumers to have to carry credit cards
2. Increases the security of card payments
3. Reduces the opportunity for credit card fraud and identity theft
4. Can provide retailers with more detailed consumer information and marketing opportunities
5. Fewer Charge Back fees to businesses
What Else Can the Google Wallet Do?
The Google Wallet will be able to automatically update your current Google Offers, participating loyalty and gift cards, coupons, and more. This will free consumers and the environment from having to carry plastic cards around. The possibilities of what the Google Mobile Wallet will be capable of are limitless and seemingly the future of credit card processing and so much more!
What the Current Limitations of the Google Wallet?
Probably the largest limitation of the Google Wallet is that it currently is only available on Sprint 4G phones with the NFC chip built in already. The Google Wallet is, however, envisioned to be available on any Android based phone in the near future. Also the wallet is currently only accepted at locations offering credit card terminals equipped with the MasterCard PayPass technology. This means there are about 120,000 locations in the US and 300,000 globally and growing rapidly. If you are curious who accepts Google Wallet payments in your neck of the woods click here. Visa has stated that the Google Wallet will be able to be used on any Visa PayWave Credit card terminal in the very near future which will greatly increase the reach of Google’s mobile wallet. Other than the limitations on where the Google Wallet can be used reception from consumers is cautiously optimistic and seems to point to a major shift in the way consumers will soon expect to pay for goods and services.
Who Else is Jumping Into the Mobile Payment Pool?
Of Course Google is not alone in its efforts to conquer the mobile payment world. Visa Inc., ISIS (Isis is a coalition of credit card companies, carriers, and handset makers), and PayPal are just a few of the major players all working on some version of a mobile payment option for consumers. As these virtual wallets gain traction with consumers merchants can expect to have to upgrade their current credit card terminals to accept the new forms of payment.
It is a common perception that the 3 major mobile payment authorities utilizing Near Field Communication chip technology (Google, ISIS, Visa Inc.) will work together to ensure that consumers will have a choice as to which product they prefer and have certainty that their "virtual wallet" will be accepted where they shop.
PayPal is working on a solution that does not count on NFC chip technology but rather a tone based payment system. The PayPal mobile payment option will integrate into merchants’ current credit card terminal or Point of Sale system. PayPal seems to be banking on the fact that merchants may resist buying new equipment or upgrading existing equipment. PayPal's option will be in addition to your current merchant services and has some very unique benefits, however, the opportunity for credit card fraud and identity theft with their system is unknown and unproven.
So with all the competition in the mobile payment marketplace will Google being first to market guarantee success?
Of course no one has a crystal ball but one thing is for sure and that is that Google is paving the way for the future of credit card processing. Google’s competitors seem to be waiting anxiously on the sidelines to see what challenges Google's mobile payment solution encounters before coming to market. As consumers become more educated and accustom to the benefits and security of the Near Field Communication chip they will happily toss their credit card and move to mobile payment technology.
If you have any questions about near field communication mobile payment technology, the Google Wallet, or anything about credit card processing whether it is in person, online, or on your phone make sure to leave them below. The Merchant Doctor will respond right away!
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