Google Wallet: behind the scenes

@AlexanderP:

Google Wallet already works fine on non-NFC smartphones for online payments (http://www.google.com/wallet/how-it-works/online.html). So, when you say, "they need to extend Google Wallet to non-NFC smartphones...", you're implicitly referring to in-store payments only, right?

@Ketharaman

Stores, loyalty/rewards, transit, cardless ATM, "chip"-secured e-commerce to name a few application areas.

Have you considered the quarterly card account charges levied by the payment schemes? the fact that all the various players will expect to make money out of the wallet - and the fact that dormancy will impact this project in the same way that it has impacted so many prepaid programmes... The rewards may be there - the risks of failure are significant.

@David

In case of Google, GW is not about payments... That's where they differ dramatically from most - if not all - players in the mobile payments field (as well as prepaid). Who wants to be "dumb rails" these days? Mobile wallet alone solves the problem that doesn't exist - that's what MNOs and banks don't get... Classic example: if you Sellotape a contactless card to the back of your mobile phone, that's a mobile contactless payment too. Simply putting that same card "inside" the phone does not change much.

Well said.

Its all about the consumer details, not the payments.

Dumb or not, banking rails for processing card transactions have been the source of a lot of revenues and profits for retail and corporate banks for many decades. With Google making a majority of its revenues and virtually all of its profits from just one product (AdWords), it's hard to believe that it hadn't originally conceived of Google Wallet as a source of additional revenues and profits by simply doing payments. When it became clear that it couldn't bypass banking rails, it appears that Google has chosen to pivot GW as a rich source of consumer data instead of shutting it down for failing to accomplish its primary goal. Only time will tell whether this approach has any legs. Having said that, in the conventional card value chain, no single party among merchants, acquirers and issuers has access to the entire consumer data set. It can't be denied that only mobile wallets own the consumer's identity, SKU-wise purchase qty. and value, and total ticket size. But, this is true for ISIS, PayPal, SQUARE and all mobile wallets, not just GW.

@ Alexander - Of course you can put the NFC for a card into your phone... Your debit card can go in, your credit card(s) your Amex Card, Your Discover Card  your loyalty card for Starbucks and Costa and so on..... Now the only problem, is how to select which one to use at the POS, how to use them... Normally this process is all done when you pull out the chosen card ....  Its not the Intent of Mobile payments that i find implausable..... its the practice, the Human factors, the fact that you are adding more parties to a transaction chain that can only increase both costs and security risks....   Google have a history of investing in many products then throwing them away after expensive investigations before failure.... They can do this, Adwords pays for it....  the question is - Is there a problem out there that anyone other than mobile advocates see as worthy of addressing (more to the point, is there a problem thats really bothering either merchants or consumers?)  

Then think on... Have you ever left a card in a store?  No problem - you have other cards in your wallet... Generally cards are worthless, they are handed to the retailer so you go back and reclaim them or report them lost or stolen.... what if the same happens to your phone? Mixing valuable phones and complex shopping scenario's is a potential nightmare for both merchants (who have to look after the phones) and consumers... Its about the users - not just the technology.

@David

Spot on. Have a look at this post.