Google Reinvents The Wallet

Interactive Gallery: Which new payments solution is most likely to spur mass-adoption of credit card- and cash-free payments?

Wallet, meet Google.

For no lack of discussion surrounding the concept of smartphone-based, near field communications contactless payments, there have been few signs that the mobile wallet would soon be ready to replace paper and plastic payments. That might change with Google Wallet.

Announced today at Google's New York headquarters, and set to launch this summer, Google Wallet is a partnership between the search giant, Citibank, MasterCard, First Data and Sprint that will bring mobile NFC payments to Android smartphones. At launch Google Wallet will allow customers to connect Citi MasterCards, gift cards or a Google prepaid virtual card to make payments at PayPass terminals. And with Google Wallet comes the newly-announced Google Offers that incorporates merchant rewards and coupons into the mix.

"Our goal is to bring together all the pieces of the ecosystem and drive a brand new experience," says Stephanie Tilenius, Google's VP of Commerce. "Your phone will be your wallet."

By way of mobile app, and using data stored on a hardware "secure element" within a phone, Google Wallet synergies the strengths of the smartphone platform and translates it into a system that, if successful, would create a new ecosystem for shoppers. Simply, customers can do more than make a purchase with Google Wallet.

"This is just the beginning," says Osama Bedier, Google Vice President of Payments. "We want to move this industry forward faster than we otherwise would without the ecosystem."

From its launch Google Wallet will enable Citi customers to load their MasterCard data onto the app. While Citi is the only bank to offer the functionality from day one, Google stresses the ecosystem is open free of cost to anyone -- merchant, bank or customer -- who wants to leverage it. For early adopters who still want to use Google Wallet, they can load funds onto a Google prepaid card.

"Today’s google wallet announcement supports Citi’s position as a global leader in payments," says Paul Galant, CEO Global Enterprise Payments, Citi, adding that it supports Citi CEO Vikram Pandit's vision of becoming the world's digital bank.

"Google Wallet represents true innovation and a technical collaboration between Citi and the partners that have come here today," Galant adds.

In terms of security, Galant stressed that customer data stays with the bank, whether it's with Citi or with any other bank that offers payments through Google Wallet in the future.

Google Wallet acts as a hub for electronic payment, merchant reward and loyalty and preferences. First Data's role in the partnership is to process electronic payments.

"I’m really excited for what we have going today. I don’t think that anyone who follows payments had any question whether this day was going to happen," says Ed Labry, president of First Data - North America. "We’re really proud to be here altogether."

Labry compared the state of mobile electronic payments today to where the credit card industry was nearly 30 years ago.

"Think about 1989," Labry says. "You could not use your credit card in a super market in the United States. Now over half the payments in a supermarket are electronic."

Google Wallet is one of several recent announcements in the payments space. Visa announced its own Digital Wallet on May 11. JPMorgan Chase, Bank of America and Wells Fargo on May 25 announced cashXchange, a new system that will allow those banks customers to initiate an electronic person-to-person payment to others simply by email or mobile phone number. Isis, a consortium of wireless phone carriers AT&T, T-Mobile and Verizon, has its own designs on a NFC payments future. Payments startup Square this week announced "Card Case," a system in which customers can store payment info with the company for cardless transactions with select merchants.

Google indicated it is ready to start testing Google Wallet in New York and San Francisco today, with a launch slated for those two cities sometime this summer. Visa said its Digital Wallet will be ready to go this fall in advance of the holiday shopping season. Isis recently stated it would begin a trial run of its system in early 2012 in Salt Lake City, Utah. Square's card case is available in select cities.