Just as Google revolutionized the smart phone industry with its impressive Android operating system, the company now looks to do the same to the business landscape with the introduction of its Google Wallet product. The company claims that Google Wallet will not only make transactions faster and easier for consumers, but for small business owners as well. If Google’s past performance with innovation is any indicator, Google Wallet aims to be the credit card of the 21st century.
Unveiled officially on September 19th, 2011, and initially available only on the Samsung Nexus S smart phone, Google Wallet works using near field communication, or NFC, technology. Essentially, NFC works by activating an embedded chip from within the device that can securely transfer data to other devices at close ranges. This means that consumers using the Google Wallet application can swipe their phone at retail outlets instead of a traditional credit or debit card and the balance will be deducted from an account automatically. For now, the service only works with Citibank Mastercard cards, but Google is offering consumers a Google credit card to which to transfer money as a work around for the time being.
However, Google is not alone in the digital wallet idea, as Visa, Mastercard, and American Express all have digital wallet products in the works, and it is rumored that many mobile carriers are also preparing to include their own digital wallet applications with new mobile devices. All of these digital wallets work using existing PayPass enabled POS terminals, in which a customer simply passes their card, and now their mobile device, over the terminal and the amount is automatically deducted from their account. There are currently almost 150,000 PayPass terminals across the country, and if digital wallets catch on, there will certainly be many more adopted.
What this means for small business owners is that they will be able to offer customers a faster and more hassle free transaction, but at a price. It remains to be seen what the cost will be to business owners once the dust settles, as major card providers are still ironing out the kinks to the digital wallet technology. As of now, retailers that use the PayPass technology should see almost no change in how transactions are processed, but those who opt into the program after major digital wallets are released may see some changes. It also remains to be seen what security protocols will need to be in place for both terminals and digital wallet enabled devices. While Google takes pride in the security of its users data, consumers may have questions regarding what happens if their phone is stolen, etc.
This technology comes on the heels of mobile POS services that have been released commercially in many markets within the past few years. Mobile POS technology has allowed retailers and mobile professionals to accept credit and debit card payments on the go, right from their smart phone device. While mobile POS technology has yet to completely catch on within the mainstream due to security fears within the public and difficulty getting business owners to adopt the technology, Google wallet and other digital wallet products may have an easier time being accepted, as they can rely on brand power. Visa, Mastercard, and American Express have decades of brand power behind their names, and as a result, they remain the most trusted sources for financial credit and debit card transactions. While Google certainly has branding power behind its name, Google Wallet will be the company’s first foray into consumer financial transactions outside of its own network of sites. Essentially, the public recognizes that Google is not a bank, and some may be leery of allowing Google further access to personal information, including finances.
For small businesses across the country, digital wallet products like Google Wallet may very well be the future, but for now, it remains to be seen whether this technology will be adopted on a major scale by consumers. With so many competing interests and companies, consumers may end up overwhelmed, leaving digital wallet technology behind in favor of more traditional methods of payment. As well, because Google Wallet is currently only available on one device through one service provider and is currently only supporting a very limited amount of card options, it can be difficult to gauge whether any problems that arise are due to Google’s product, or the digital wallet concept as a whole.
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