Google Wallet Comes Out

by Mercator Advisory Group 0

Google’s NFC plans got a lot clearer yesterday at its New York announcement of Google Wallet and its very strong lineup of partners. Announcing what could be the foundation for an NFC ecosystem build out, Google’s payments launch include roles for Citi (as issuer), Mastercard (card network), FirstData (trusted service manager), and Sprint (mobile operator selling the Google Nexus S NFC-equipped phone).

It could very well be a compelling proposition.

With Wallet, you’ll be able to add your existing credit cards (though only Citi-backed Mastercards are a partner right now of the major card companies). And it’s a wallet you can lock, Tilenius notes. There are multiple levels of security. There’s the phone lock, a required Google pin, credit card information encryption, and your credit card number is never fully displayed.

Right off the bat, Google Wallet will work with Mastercard Paypass. This means right now 300,000 merchants around the world and 120,000 in the U.S. are technically ready (though it’s not rolling out everywhere yet). It will initially work with “Gcard” a Google pre-paid card set up by Mastercard.

The initial trials will be in San Francisco and New York. Tilenius says this will expand nationally in the coming months.

Merchants accepting PayPass are ready to participate. Google Offers, the couponing and incentives part of the program, takes more work. Macy’s, Subway, Walgreens drug stores, and Toys R Us are among the launch partners for the Google Offers effort.

Google was at pains to declare its effort an open platform. Google will be looking to work with other issuers, card networks (especially Visa), and mobile operators.

There’s plenty that has to happen and nothing will happen overnight. The existence of a critical mass of NFC-equipped handsets is a few years off but it will, as our own forecasts indicate, accelerate rapidly by the end of this year.

Success will take patience and commitment. Google can’t look at this as some secondary experiment to see what happens and then walk away in a couple of years. It’s going to have to help build out this NFC world and it won’t be cheap.

Ahead of the Wallet announcement, the company has gotten started with NFC. At this week’s National Restaurant Association show, Google was busy showing off its Places service and programming NFC tags for restaurateurs to post in their windows. A tap of an NFC phone on the large red map marker will take the handset owner to the Google Places entry for the eatery. No more peering at menus behind dirty glass.

But all is not rosy. Immediately after the Google Wallet announcement, PayPal filed a complaint against Google’s head of mobile payments, Osama Bedier. Bedier had been PayPal’s lead executive in that role and had negotiated with Google on a PayPal-led payments program. At the very least, it looks like the cost of hiring Bedier could be a lot higher than Google thought. More likely, this was anticipated, too.

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