Google Wallet will support both Citi MasterCard and a Google prepaid card.
Imagine this: It’s 2015. You walk into a store, buy your groceries and go to the cash counter. The store’s barcode reader scans the pricing information on your purchases and flashes the total amount on a tiny device placed on the counter.
You take out your mobile, punch in the amount and click ‘pay’. But then, your smartphone reminds you that you are eligible for some discount at that store because of some earlier transaction. It calculates the discount and automatically deducts the payable amount from your account.
The whole process is complete in a few minutes, depending on how much time the barcode scanner took to read the price information.
If you think this is too futuristic, think again. Google, in May, announced that it will soon roll out its Wallet service on a test basis in select US cities. The service will allow owners of Nexus S, an Android phone that has the Near Field Communication feature (NFC) to make payments using their cellphone at stores and shops that will participate in the service.
For now, it has to be seen how well the concept works. Theoretically, however , Wallet has huge potential. The reason for this is the NFC microchip, which will allow devices to communicate with each other with just one touch.
“At first, Google Wallet will support both Citi MasterCard and a Google prepaid card. From the outset, you’ll be able to tap your phone to pay wherever MasterCard PayPass is accepted,” Rob von Behren and Jonathan Wall, the brains behind Wallet, wrote in their blog.
“Because Google Wallet is a mobile app, it will do more than a regular wallet ever could. You’ll be able to store your credit cards, offers, loyalty cards and gift cards. When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you.”
A question of security
In spite of its seemingly complex nature , Wallet, in reality, is quite basic. For example, once the trial starts in two cities in the US, people wishing to use Wallet will have to link their credit card or debit card to this payment system through a gateway provided by a firm called First Data.
Once their cards are cleared by First Data, they will be able to pay using a Nexus S phone at stores that offer Pay-Pass checkout. To make a payment they will just have to tap the phone on an NFC data reader, punch in the amount and a PIN number, if they have set one.
Of course, these are still early days. As it is with all wireless communications , security is one issue. Google claims that the NFC communication between devices will be encrypted and hence completely secure. While details are sketchy, Jagannath Patnaik, director at Kaspersky Labs India, says that data encryption will have to be the stronger 256-bit as the prevalent 128-bit encryption may not be enough.
“When it comes to mobile payments, users will have to pay attention to two important points. One, how strong is the encryption applied on communication between devices. And second, the phone itself has to be secure device. It is important that there are no malware or rogue apps on it,” he says.
Google says that its system relies on the NFC chip and hence stores all the sensitive information outside the mobile operating software and phone hardware . It says that even if a phone is compromised, Wallet information will be safe. The company also says that users will be able to set their own PIN as well as credit limit in a bid to safeguard themselves in the case of mobile phone theft or loss.
Simpler alternatives
While Google has taken the hi-tech road, there are other players that are trying to cash in on the ubiquity of mobile phones in a much simpler way. For example, US outlets of Starbucks—internationally known for its coffee—has come out with apps for Android, iPhone and BlackBerry that allow users to pay using their mobile phones at its outlets. The app basically links to a customer’s existing Starbucks account through data connection and deducts the amount from it once he has decided to pay using the mobile phone. In India, mCheck and Airtel trying to popularize payment through mobile phones. Airtel has launched Money in several Indian cities, allowing people to pay through their phone at the stores and shops that have entered into agreement with Airtel.
But unlike Wallet, Money doesn’t have access to your credit card or any bank account. Instead, it requires users to top-up their account through a recharge from Airtel stores and then use that money to do shopping.
Airtel claims it already has more than 2,200 merchants, including franchises such as Costa Coffee and Yo China as well as local chemists and grocery stores, who will accept payments via Money.
“First credit cards replaced cash and now mobile phones are going to replace credit cards. We had earlier rolled out Money in Gurgaon and Chennai and the response has been promising,” said Sriram Jagannathan, who heads the Airtel initiative. On the other hand, mChek is slightly more exhaustive in its approach. It requires customers to link their credit or debit card information with an mChek account. Once the process is complete, the company claims that users can “securely pay phone and utility bills, insurance premiums, buy flight tickets, movie tickets, and transact on e-commerce web sites”. And yes, if you still think the technology is rather futuristic, it would help to know that Japanese mobile service provider NTT Docomo has been running their own version of a cellphone payment system in Japan—with varying degree of successfor the last six years. Called Osaifu-Keitai, the service allows people to not only make payments through their mobile phones at participating stores, but also lets them use the phone as ticket at train and bus stations.
NFC: Communicate with a touch
At first glance, Near Field Communication (NFC) looks like yet another wireless standard in the face of similar technologies — including Wi-Fi to Bluetooth — that are vying for user attention. However, probe a little deeper and you realize how NFC is different and why it is expected to be at the heart of any future payment system using mobile phones. In many ways, including theoretical data transfer speed, it is similar to Bluetooth. But one area where it differs — and which makes all the difference — is that, unlike Bluetooth where permissions have to be given before two devices can snuggle up together and communicate, NFC works automatically. This means that devices, in most cases cellphones, share information by physically coming in contact with each other. NFC chips can securely store information and that makes them ideal for use in mobile payment services. But it’s not the only use of NFC.
The technology can also allow for a seamless integration with various devices. As Nokia demoed recently using N9, NFC can allow cell phones to pair with peripherals like speakers or Bluetooth headsets just by coming in contact with them. The technology can also, in the future, replace RFID chips, which are used in a number of items, including attendance swipe cards. Currently, NFC is supported only in handful of phones.
However, there are reports that Apple will add the feature in its upcoming iPhone. RIM has also promised to add NFC capabilities to some of its BlackBerry handsets by the end of this year and there is a possibility that the next Xperia range of smartphones from Sony Ericsson will have NFC chip in them. Nokia too expected to ship a hadful of devices with NFC chip in them by the end of this year.