Google has finally unveiled the long-awaited Google Wallet, a service that allows users to pay for purchases with an Android-based smartphone. The offering effectively turns the smartphone into a wallet, thanks to near-field communication technology.
With the launch, Google ostensibly believes that the days of swiping credit cards are coming to an end. Going forward, wirelessly connected people around the globe will rely upon their smartphones and nothing else to quickly and efficiently pay for products.
However, debate rages over whether Google Wallet will actually be able to succeed in a market that has relied on credit cards for decades. After all, people are currently carrying around several cards from different banks, and they've grown accustomed to that purchasing process. Moreover, Google will need to work long and hard to educate the public on why its option will be at least as secure as and even better than all the others that are coming along.
Simply put, Google's road to success with Wallet will be long and hard. And at least for now, the cards are stacked against it.
Read on to find out why:
1. First and foremost: Security
Google knows security will play a key role in the success of its Wallet option. To help improve security, the company requires users to establish a PIN that must be entered before purchase. The search giant said that payment information is encrypted and thanks to MasterCard's PayPass feature, users should be secure. But will they? As cyber-criminals become more accustomed to how Google Wallet works, it will be put to the test, and issues could arise. Plus, if a user misplaces his or her phone or it's stolen, Google offers a single solution: "Cancel your cards." That alone could derail Google Wallet on its path to success.
2. Vendors need to get in line
There are many moving parts that must all work together for Google Wallet to succeed. A big one is vendor support. According to Google, Wallet will be available on the Nexus S 4G from Sprint first, with more devices to follow. The only issue is that Google Wallet will only work on NFC-enabled devices, and as of this writing, there are only two that support that technology. More companies will in the future, but if Google doesn't get the kind of vendor support it needs in the short term, it might not be long before Google Wallet fails.
3. Merchants need to play ball
In order for Google Wallet to be a success, the search giant will need merchants to support NFC in their stores. Partnering with Citi and its PayPass service is a good first step, but that offering is a relatively small number of places around the U.S. when one considers the sheer number of locations where products can be purchased. Credit cards, on the other hand, are welcomed at the vast majority of retail outlets around the country. Google will need to do quite a bit to improve retailer support just to get Google Wallet off the ground, let alone make it succeed.
4. Payment processors too
As mentioned, Google has partnered with Citi MasterCard to launch Google Wallet. But the company must also partner with other top banks to ensure that it can get its offering working with as many cards and technologies as possible. American Express, Visa, Discover and other top credit card companies need to see the value of Google Wallet. Google needs them to get on board.