Google has extended its phone-based wallet into its cloud, allowing it to claim that any credit card can now be used to pay with a bonk of the handset.
The arrangement, announced yesterday in a blog posting with suitable video accompaniment, means a Google-Wallet-enabled phone can make payments using wireless Near Field Communications (NFC) with the balance being deducted from just about any credit or debit card, as long as one is prepared to share those card details with Google. Here's how Google is attempting to sell its phone-based payment system to the masses, complete with a confusing cloud metaphor:
Google's (mobile) Wallet resides in a blob of secure storage embedded in half a dozen Android handsets, but the web advertising giant has had a hard time getting credit card providers to port their software that controls the NFC radio hardware to run within that secure component. US network operators have an alternative secure element, embedded in the SIM and called ISIS, and banks seem unhappy with handing control over to Google, forcing the company to find an alternative approach.
That alternative is basically issuing every user with a short-term instant-payback credit card from MasterCard. That card is installed in the secure element, and authorises payments with the balance being paid off instantly using one of the cards uploaded to the Google cloud.
The idea is to combine the advantages of both cloud and NFC payments. Cloud payments, being pioneered by PayPal, rely on both the customer and the retailer having reasonable connectivity, and charged batteries. NFC payments can be authenticated without any connectivity, and even with a dead phone battery*, but they do need special apps written specifically for each secure element.
Google's idea is to have one special app, able to authenticate when connectivity and/or power is lacking, then take the payment from the customer's real account when connectivity becomes available.
The idea is sound, and removes one barrier to adoption, but the reluctance of companies to put their vouchers and loyalty cards within sight of Google's analytical engines could be a decisive factor in who gets control over wide-scale adoption of NFC payments. ®
* The NFC component can be powered from the cashier's reader, for example, using an induction coil. That also reduces the range from which a NFC device can be read, massively, enhancing security.
