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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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