If you were a fan of the classic TV series Seinfeld in the 1990's, you might have seen the episode where Jerry's friend George Costanza overstuffs his wallet until it explodes and ends up with the contents littering the street around him. Today, with the launch of the Google Wallet, the mammoth search company is trying to prevent that same fate from befalling consumers in the United States and around the world.
In a trial stage in New York and San Francisco since May, 2011, this technology is designed to replace your credit cards with a smart phone equipped with a special chip. Using this so-called near field communication (NFC) technology, you simply tap your phone against a point of sale terminal at the cash register to make a purchase.
Still fairly new, NFC allows for wireless connections, data exchange and simplified transactions between two devices in very close proximity, that's the "near field." And these short distance communications are encrypted, keeping your personal data secure.
The initial launch includes just customers within the Sprint network, who own a Nexus S smart phone, running the Google Android operating system. These consumers can download a mobile application which can be used to make payments using the phone. And as MasterCard is the only credit card company currently signed up, users will also need either a Citi MasterCard account or a Google prepaid card.
Reports indicate that the service will be available initially only in the United States, although the prepaid cards should work internationally. Google also plans a European launch of the Wallet in 2012, targeting the UK as one of the first international markets. And later this year, Google's next Nexus phone will also include the chips needed to run the Wallet.
The next step for this technology is wider adoption by both consumers and retailers. Analysts estimate that 100 million people outside the United States use mobile payments, but just 3.5 million Americans are taking advantage of this convenient strategy. Before gaining wide adoption, more of the major credit card companies must be on board. In the announcement yesterday, Google pledged that agreements with Visa, American Express, and Discover are in the works for future versions of the Wallet.
And on the receiving end, retailers, including restaurants, convenience stores and most other places where consumers spend money, must be equipped with the wireless point of sale terminals needed to read the phone signal. Google estimates that about 300,000 businesses both in the United States and overseas have the MasterCard PayPass technology needed to use the Wallet. As New York City has been one of the early testing grounds, most cabs in the city carry the readers, as do Bloomingdales department stores. Other national chains such as McDonalds, 7-Eleven, Best Buy, Foot Locker, and BP in the US and Tesco, Boots, and Burger King in the UK are early adopters.
For those concerned about the safety and security of this payment method, note that transactions require a Personal Identification Number (PIN) and the phone's screen must be turned on, preventing covert or unwanted payment events. The Wallet function can also be disabled remotely.
From all indications, achieving more universal acceptance of this technology by consumers in the United States will take some time, but as more and more mobile phone providers and retailers jump on board, the numbers will begin to shift.
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