Google Wallet – mCommerce

The principle is simple. When Christmas shopping, the retailer places your credit card into the electronic reader, enters the amount , you type in your PIN number and the system debits your account and credits the retailer via an Internet/dial-up connection.

Then you call your friend to tell them what you just bought.

What if the credit card details are stored on your phone, and the card reader communicates directly with it?  You still enter a PIN for large transactions and the system still deals with the financial side.

No need for credit cards, no need for money.

Enter Google Wallet!


Most Internet users are familiar with e-commerce. We browse the web, find products we want on sites like Amazon, and,  using a secure(https:) payment system,  we pay for the goods using our credit cards.

For sites like eBay, the Paypal system exists to ensure the correct exchange of monies between seller and buyer.

Also a limited number small value items can be purchases via your mobile with the costs appearing on your monthly bill.

Now, both Mastercard with PayPass and Visa with Paywave have developed Debit cards that allow the user to ‘wave’ across an electronic reader, much in the same way as the Oyster cards used on London Underground.   The card never leaves your hand, you simply wave passed the reader and for low value transactions there is no need for a PIN code.

The logical next step for both these systems is to do away with all those pieces of plastic and place everything electronically on your mobile and thus create m-Commerce.

m-Commerce – Google Wallet

Google Wallet is such a m-Commerce system. It resides on your mobile phone and each credit company will produce an application(App) that can reside in the virtual wallet and enable a series of payment transactions.

You would open your Google wallet in the same way you open a web page and then use the a specific App in that wallet to pay the bill.

Remember Google owns the base Android operating system( See section iOS verses Android). So Google Wallet is only available on Android based phones.

But how does it work?

Nera Field Communications.

Near Field Communications(NFC), is a technology that is being included in many new mobile phones. The clue is in the name, namely that the chip emits a very short range signal, which can be picked up as you swipe/move your phone over the reader in the shop. The communication is very quick, secure and transfers the details of the purchase to the phone. On your phone you have a credit card application, which will prompt you for your pin and communicate the transaction details to your credit card company and leave an electronic record with the retailer.

But what if your mobile phone does not have an NFC?

Most phones have MicroSD cards or slots for these cards. We use them as additional memory stores or to transfer/back-up information between devices.  Another option is for your credit company to issue you a MicroSD card, which you place in the memory slot , which uses NFC and an associated App, to credit your account.

In Australia, special phone covers with NFC chips offer both Android and iPhone customers access to various banking/payment  services.

Wallet heaven

In theory there is no difference in security between a traditional credit card and a mobile wallet. For large transactions both would require a PIN and in the case of lost or stolen mobile phones the memory can be deleted instantly using the remote wipe function.

In your Mobile wallet you may have several Credit card Apps, access to your bank,  a string of shop loyalty cards and your rail, car parking and bus pass.  All of these are able to perform a transaction by simply waving your mobile next to the reader and more importantly they can interact to notify you of special offers etc.

Heaven also exists for the mobile operators. Whilst few if any would get involved with the actual financial transaction, the wallet concept tied into customer banking could dramatically reduce customer churn(users switching operators) and hence saving huge sums. This is why the operatots are pushing for SIM based NFC functionality, rather than phone based.

Wallet Hell

The key will be the cost to the retailer of installing NFC readers and how much the credit companies charge the retailer for each transaction.  The beauty of NFC is that it incorporates the technology already used by debit card ‘wave’ systems like PayPass and PayWave.

More credit card companies need to sign up to make the system viable.

For the time being all receipts are still printed, a  problem if you have thrown away your physical wallet for a virtual one!

Unlike a regular credit card your mobile need power. The more applications we add onto the phone the greater the battery drain.  Remember, the NFC chipset will use additional power.

Finally, what will Apple come up with. The new 4S iPhone has no NFC chipset?


Like it or not, the concept that is NFC based Google Wallet type services will roll-out through 2012 with more and more retailers accepting the system.  In Singapore the first country wide scheme has received approval and will included their major mobile operators.

ISIS is another competitive system, but this is also built on NFC, so for the time being. You’ve seen the future and it’s NFC.

African Spin

In Africa only 10% of the population have bank accounts but 60% have mobile phones, so Orange have partnered with regional banks to create Orange Money.  Account holders can receive, pay and transfer money between other Orange Money users, whilst the partnership with Western Union allows for the global transfer of funds.

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