December 7, 2011

Google Wallet is anticipated to be the first high-tech solution to replace credit cards.

The mobile payment system works by implementing a near-field communication connection that allows consumers to make secure payments with a simple tap of their phones at PayPass checkout terminals, but just how quick and convenient is this type of system?

Google Wallet and MasterCard are the first to embrace the new technology.
PayPass allows you to tap a PayPass-enabled credit card, cell phone, or key fob at the checkout, keeping all account information in your hands and your hands alone.

The technology features built-in safeguards that won’t bill you more than once, even if you end up tapping twice by mistake. You know the payment has been accepted when a green light on the reader appears and a beep sounds.
If you haven’t seen a PayPass terminal at any retail checkout counter, you’re not alone. Most retailers have yet to implement the tap payment technology and it may take a while for the world to catch up. Plus, people have a history of rejecting change.

But an instant, secure tap at the register with your cell phone seems so simple. Asia and Europe have already been using the tap and go technology without any major hurdles, so why hasn’t America caught up?

For starters, Google Wallet is only available on near-field communications phones like the Sprint Google Nexus S.

Few phones are equipped with the NFC technology, although Google is in discussions with Android phone makers to bring the NFC chips to the masses.

One foreseeable downside to the NFC chip is that it’s useless when the phone is turned off, so during an off day when you forgot to charge your phone and the battery runs out, you’re just out of luck.

Another drawback is that PayPass terminals require a passcode for purchases over $50 and these aren’t even simple PIN entries either, since Google Wallet doesn’t consider the basic 4-digit code an acceptable passcode. This puts a huge downer on the whole “tap and go” selling point.

Is swiping a plastic card really that much more time-consuming than digging through your purse to find your cell phone only to type out a much longer passcode?

Also, if the technology is only available through Citibank MasterCard and a mobile app, what happens when you reach a point where you consider applying for balance transfer credit cards?

Of course you can store your new credit card information into Google Wallet, but that seems to take about as much effort as dialing the activation number on the peel-off sticker. This could make consumers less likely to apply for balance transfer credit cards or other financial products if it seems like too much work to get everything set up.

None of this is to say that Google Wallet doesn’t have its merits.

This is actually a first step on the road to completely new payment technology, the future of which holds things like digital coupons and loyalty card points.

Consider the first incarnation of Google Wallet as a test run.

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