In late May 2011, Google announced its revolutionary mobile payment platform that enables consumers to tap or wave a smartphone at a point-of-sale terminal, including vending machines equipped with a near field communication (NFC) enabled reader to initiate a secure transaction, generate coupon offerings, and activate applicable loyalty programs.
NFC enabled readers for vending machines include MEI’s 4 in 1 Payment Acceptor, USAT’s ePort ‘G’ Series devicer, the Vivotech 4500 Series or Coinco’s upcoming Arrow Smart Reader.
To date, such data exchanges required multiple taps but Google’s innovative scheme claims to accomplish these tasks simultaneously from a single tap or wave action. This transaction application, termed the Google Wallet, is designed to work with Google’s Android mobile phone software in combination with NFC technology.
The Google Wallet simply establishes a reliable a way to pay for goods via a mobile phone (m-commerce). The Google Wallet was recently launched through a partnership with Citibank, MasterCard, Sprint, First Data and three major retailers (Macy’s, Subway, and Walgreens). The Google Wallet is a downloadable application for an Android smartphone equipped with NFC technology. It is important to note that the mobile device supporting the download must contain an NFC chip.
Consumers carrying the device can then use it to complete purchase transactions at compatible POS terminals. It is estimated there are more than 311,000 NFC-compliant retail locations worldwide (i.e., POS locations accepting MasterCard's PayPass settlement service). Part of the application download includes the flash sale, coupon-based Google Offers software, akin to Groupon (groupon.com) or Living Social (livingsocial.com) services.
Google requires users to download its Wallet application from the Android Market and subsequently link the application to an active CitiBank MasterCard or Google Prepaid Card. As an incentive to consumers, Google has bundled the Wallet with Google Offers, thereby enabling consumers to automatically apply discounts, promotions, and affinity programs to relevant sales transactions in real time. The joint introduction of the Google Wallet and Google Offers links electronic coupons and payments to create an unparalleled shopping experience built upon highly successful online and offline shopping concepts.
The challenge facing the Google Wallet (and alternate e-wallet formats) is, “Are consumers interested in using an NFC-enabled mobile phone for making purchases? A recent online survey conducted by Visa found that nearly two-thirds of respondents between the ages of 25 and 34 responded favorably to mobile phone purchase payment. The survey also revealed that 64 percent of the respondents were interested in receiving coupons through a mobile device.
In addition, more than half of those surveyed admitted carrying a mobile phone at least 75 percent of the time.
It is widely assumed that the demand for NFC technology is being heavily driven by the emergence of contactless payment formats packaged into mobile devices (advanced m-commerce). The development and deployment of integrated NFC chipsets to cellular phones is projected by ABI Research to lead to widespread adoption of NFC contactless payments during the next few years.