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What Does Google Wallet Need to Succeed? A Habit

Posted by admin | Posted in Cell Phones & Plans | Posted on 29-05-2011

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MasterCard

What does Google need to do to make its Google Wallet mobile-payment system a success? Give people confidence. Then make it a habit.

Think about it. So many slight modifications to our daily lifestyle mean so many millions to manufacturers, especially as they’re repeated, day in and day out. And, once established, the cycle self-perpetuates.

Checking email on a BlackBerry. Tweeting. Checking in on Foursquare. A few more actions in CityVille. Planning the fastest route to your destination on a traffic app like Inrix. Keeping tabs on friends in Facebook. All actions that can be performed in a minute or two, several times a day.

The problem with financial applications is that people are afraid of giving up access what they consider to be their most valuable possession: money. My father, an engineer, avoided carrying a pager, a cell phone, or an ATM card until his employer (and his family) dragged him into the twenty-first century. I still haven’t joined Mint.com because, deep down, I’m terrified that my financial information will leak out. For Pete’s sake, Intuit can’t even keep their cloud services up consistently, it seems.

But mobile wallets are another matter. As with the GPS market, the U.S. lags behind Europe, where chips have been built into credit cards for years. When I lived in England, I made the leap from our magnetic-stripe cards to what’s known as “chip and PIN” rather easily; as a chip reporter, I instinctively felt comfortable with my financial information automatically encrypted within a chip, with my four-digit PIN code as the key.

Frankly, I have a difficult time understanding while the technology hasn’t crossed the pond to the U.S., where smartcards are nearly ubiquitous in most corporate enterprises, and are increasingly being used in universities and as stored-value cards for transportation. Trusted Platform Modules (TPMs) are now a staple of most business laptops. There’s still a barrier of unfamiliarity that may hold back Google Wallet or a similar technology, but a smart marketing campaign should overcome it.

Launched in beta Thursday, ‘Google Wallet’ is a free Android app that securely stores multiple credit cards, or a Google prepaid card linked to your credit card (one that Google provides). When opened on an NFC-enabled smartphone, you can tap your phone against a supported payment reader and the item you want to purchase is instantly charged to your credit card.

I think there are four problems that need to be solved to assure consumer confidence in Google Wallet. First, customers need to be assured that if they lose their phone, they won’t give a thief access to their bank account. I haven’t seen too many people report that the NFC chip still requires a PIN code to unlock it. I think that’s a critical piece of the puzzle.

Second, the carrier needs to convince the customer that their bank account won’t be vulnerable, period. Customers need to be reassured that their accounts won’t be remotely drained by a malicious NFC reader built into a subway staircase, for example.

Third, compatibility can’t be an issue. I may prefer my local bank because of their service, but I also have to be assured that their checks (and debit cards) can be used at any ATM I please, even if there’s an extra fee. Visa’s proposed alternative with Google Wallet must interoperate, period.

Fourth, if this is a digital wallet – make it one! A year ago, I argued that iPads could be fitted inside cases equipped with Bluetooth keyboards, making them a netbook. By that fall, they were in the market. The same could be done with a case for an NFC phone: include a clear sleeve on the back for an driver’s license or other ID, with maybe a slot for a backup mag-stripe credit card, or cash, for tips.

Make it a habit

One of the best presentations I’ve attended in recent memory was by Kendra Markle, a researcher at the Stanford Persuasive Technology Lab, who explained how mobile apps hook you. Essentially, she said, apps that successfully modified a user’s behavior to make using the app a habit, succeeded.

I doubt this will be an issue with existing Mastercard Paypass customers: there’s not much of a leap between tapping a card and tapping a phone. And U.K. customers shouldn’t have too many issues with “tap and PIN,” assuming Google brings Wallet there, too.

But U.S. consumers need to feel comfortable with tapping their phones. To do that, Sprint, Citibank and Google need to establish a habit. How? Discounts, discounts, discounts. Visit a Starbucks, get 50 percent off a latte – but only if you tap. Movie tickets? A $ 2 discount at your local AMC, for those who use Google Wallet. (Here’s your commercial: Enter customer, dressed in spacesuit. Taps NFC reader. Announcer: “That’s one small tap for man…” Cue 2001 theme.)

If you want cold, calculated behavior modification, look no farther than the morning commute. People sit in the same seats, park in the same spots, buy the same ticket. They’re tired, frazzled, stressed-out zombies. Establish Google Wallet as an adjunct to BART’s Clipper pass, a MetroCard, or other stored wallet system and you win, if only because of habit.

A virtual wallet isn’t going to establish itself overnight. Google’s single phone, the Nexus S, won’t change the world. But over a few years, it might. One tap at a time.

For more from Mark, follow him on Twitter @MarkHachman.

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Google Is in Your Wallet

Posted by admin | Posted in Cell Phones & Plans | Posted on 26-05-2011

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Google’s new mobile payment, offers and rewards system may be open and secure, but it won’t be alone.

Google Wallet

Years ago I met with an NFC technology company that promised me that, someday, NFC chips would be in phones and we’d be paying with them instead of using old-fashioned credit cards. Back then, France already had NFC-enabled phones. Unfortunately, it took years for the technology to reach U.S. phones and, apparently, Google to figure out how to make a system that could replace not one, but potentially all the credit cards (and rewards cards) in your wallet.

Google’s announcement today was as everyone expected an official unveiling of its NFC-based Google Wallet payment system. The addition of Google Offers was somewhat less expected and probably not exactly welcomed by daily-deal competitors Groupon and LivingSocial.

The Internet giant appears to have thought of everything. This in-phone system will not only work with a select set of Citibank MasterCard credit cards, but with the use of the built-in, prepaid Google card, it’ll let you add funds from virtually any credit card (but you’ll use the Google Card to pay). Paying with an NFC-enabled phone (which Google optimistically says will account for 15% of the mobile phones on the market by the summer) is pretty much like paying with any of the tap-and-go credit cards and fobs you’ve used in the past.

When I looked at NFC years ago and in most of the years since, the biggest question has always been security. By definition, NFC or “Near Field Communication” only works if you are millimeters away from the corresponding transceiver. Still, many consumers I’ve spoken to have expressed concern about the ability of hackers to brush by you and either charge on your cards or pick up your credit card info.

During the Google Wallet rollout, Google made clear that nothing is more important to them than the security of this new commerce ecosystem. Well, except for openness. That’s right; this is an open, free system. Now, Open and Secure seems like a perfect oxymoron, but Google insisted that it’ll make sure it’s “open as possible as long as we do not sacrifice choice or security.” Fair enough. I do think that Google stressed “open” as a way to attract more partners beyond the formidable likes of Citibank, MasterCard, Subway and Walgreens. On the other hand, will credit card competitors and currently not-a-partner Visa see it the same way? Or perhaps we’ll be seeing another mobile payment system from Visa and, maybe, Microsoft or, much more likely Apple.

What if during the upcoming Apple World Wide Developer Conference, Apple’s Steve Jobs stands on stage with an iPhone 4s and announces integrated NFC support and welcomes its new commerce partner Visa? What happens to Google’s open plan then? Nothing really, but we will end up with competing mobile phone payment, ecommerce and rewards plans.

This somehow seems more than likely.

Getting back to what Google unveiled here, I was impressed with its security plans, which includes a PIN number for the Wallet. Google, though, answered the concern about someone slurping your NFC data by turning off the NFC chip when the phone’s screen is dark (as it often is when it’s in your pocket) and the addition of a smart card reader chip that talks to the trusted partner First Data, the company that actually processes the transaction data. That chip will self-destruct if someone tries to hack or crack it. Sounds pretty good.

What Google didn’t say is which phones beyond Sprint’s Nexus S 4G, will have the combination of these two chips. Speaking of Sprint, it is interesting that with the heavy focus on open, Google doesn’t have more carrier support for its Wallet. That’s probably because the other three major U.S. carriers have their own plans for NFC payments in the form of Isis, but that system won’t be rolled out until next year. Sprint promises to work with Android partners Samsung, HTC and others to integrate the chips, but without Verizon and AT&T (two favored Apple partners), one wonders how many NFC- and Google Wallet-enabled handsets will actually arrive.

Google Wallet is free to users and partners, but if you give Google permission, it will use your location and transaction data to deliver you geo-specific offers. I assume Google will make money on those offers in much the same way they do ads. With all the recent issues Google has had with privacy concerns, I’m dubious as to why Google believes any consumer would trust Google with that information (though they’ve trusted credit card companies with it for decades).

For now, the Google Wallet field tests and Offers is only in New York and San Francisco. There are thousands and thousands of merchants ready to accept touch payments, but without the phones, Google Wallet will likely be sampled by a relative few.

The reality is that Google’s plan for the future on mobile commerce, rewards systems and offers, is the right one, but my bet is it will not be the only one and that, in and of itself, could slow down the adoption of your phone as your Wallet. That would be a shame, because I think I’m ready to start carrying around something like a Google Wallet.

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