Google Continues Support for NFC; Apple and NFC?–Not So Fast

Google has introduced its new cloud-based Google Wallet, something that had been expected for months as the Web giant wrestled with the disappointing take-up of its first wallet version last September.

Google embraced NFC for the first version of the wallet, putting payment applications, along with coupons and offers, directly on the secure element in the NFC phones.

But it encountered many problems–especially in signing up merchants to accept its NFC-based payment and offers together, as well as recruiting issuers and getting enough wallet phones into the market.

Some observers had predicted Google would abandon NFC in favor of a completely cloud-based concept of enabling mobile payments and offers–perhaps similar to the PayPal mobile-payment model that Google Wallet chief Osama Bedier is believed to have worked on while he was at the eBay unit.

PayPal this year launched its attempt to expand its online payments business to the physical point of sale, mainly by having consumers punch in their phone numbers on point-of-sale terminals. Their payments would be handled in the cloud by PayPal.

PayPal might later add an NFC component to the transaction, perhaps enabling users to transmit their phone numbers to the point-of-sale terminal with a tap of their phones.

But Google believes NFC is still the best way to make the link between the online and offline worlds now.

Tap Transmits Google Wallet ID
The new Google Wallet enables U.S. consumers to add their credit and debit cards supporting Visa, MasterCard, American Express and Discover Financial Services to do both in-store and online purchases.

The card accounts will be stored on Google's servers. But for the in-store purchases, Google will link these credit and debit card accounts to a virtual MasterCard card number stored on the secure element in NFC phones that support the wallet. Google calls this virtual card number the “Google Wallet ID.”

Users will be able to tap to pay at any MasterCard PayPass-enabled point-of-sale terminal in the U.S., with the wallet using the virtual MasterCard prepaid card on the phone to initiate and “facilitate” the transaction. Google said it will charge the selected credit or debit card account in the cloud after the user taps his phone on the PayPass terminal to transmit the ID number from the phone to the terminal.

Google believes the infrastructure of contactless merchant locations in the U.S.–which it placed at 200,000–is sufficient and will grow substantially as merchants upgrade their POS terminals to comply with EMV mandates from the major payment networks over the next few years.

Google also noted that consumers will not need a mobile Internet connection to make a payment in-store if they have previously added a credit or debit card to the wallet. That also is an advantage over purely cloud-based payments, which requires a reliable Internet connection.

Robin Dua, head of product management for the Google Wallet, told me Google would also continue to support SingleTap with NFC, which is designed to enable consumers to pay and redeem coupons, rewards and offers with one tap of the phone.

He declined to elaborate on how this would work with cloud-based payments or how Google would sign up more merchants to support the feature–with merchants mistrustful of Google to begin with.

Predictions of an NFC-Enabled iPhone Premature
Meanwhile, rumors and speculation are again rife that the next iPhone will support NFC by the tech press and bloggers–citing an obscure code dump from an iPhone prototype, the planned acquisition by Apple of fingerprint sensor provider AuthenTec and new patent requests from Apple, such as iTunes gifting via NFC.

But an interview by NFC Times with a source with a key component supplier indicated that Apple will pass on NFC yet again this year.

Another source pointed out that if Apple had ordered NFC chips for the iPhone and other devices, supplies of NFC chips probably would be harder to come by. But the source, a small buyer of NFC chips, said there is no such problem getting chips from the only supplier in a position to supply Apple with NFC technology this year–NXP Semiconductors.

With the release of the next iPhone expected in only six to 10 weeks, there should be more buzz from suppliers by now if Apple were planning to adopt NFC–even with Apple's strict confidentiality policies. But that buzz is hard to find.

And Apple would probably want to support NFC in not only the iPhone but in a range of devices. Despite the speculation that Apple has designs on the payments business, the tech giant would be more likely to want to use NFC to enable users to easily pair their Apple devices and share content. This would require lots more chips, for in a range of Apple devices, from iPods to Mac computers.

A recent visitor to Cupertino for meetings with Apple told me the company is indeed interested in NFC, but he senses that Apple is not ready to act on that interest until it gears up for the iPhone 6, not this year’s iPhone 5–or whatever Apple plans to call the next iterations of its smartphones.

Google’s Secure Element Problem Remains
If Apple enabled secure NFC applications on its iPhone, it would no doubt do so with an embedded secure chip, which it would control.

But only Apple has the clout to keep this chip out if the clutches of mobile operators. Not even Samsung Electronics, which is putting an embedded secure chip in each one of its Galaxy S IIIs and probably all of its other forthcoming NFC models, can control the chip in such markets as the U.S. and most of Western Europe.

This has been one of the most vexing problems Google faced with the first version of its wallet. It has needed control of the secure element for payment and also its SingleTap coupons and offers.

That is a big reason Google has managed only to get the first version of its wallet onto a total of six Android smartphones to date, in addition to its new Nexus 7 tablet. All anchor the wallet to an embedded chip.

But putting the secure wallet applications on a SIM card is even more problematic for Google, since most major telcos in the U.S. and elsewhere have not exactly warmed to the idea of enabling a competing wallet from the Web giant.

For example, Isis mobile operators have blocked the Google Wallet from some Android models.

Yet, even with Google’s new cloud-based wallet, it still needs control or at least access to the secure element in the NFC phones that support the wallet.

Google now owns its own smartphone manufacturer, but has said it will allow its new Motorola Mobility unit to remain autonomous. And, in any case, Motorola only ranked as the eighth largest phone supplier in the first quarter, according to U.S.-based research firm Gartner.

So, Google might need to supplement the NFC phones in which it does control the secure element with bridge technologies to get around operator control of secure elements in other phones.

Still, it remains to be seen whether Google’s new cloud-based wallet with its strong NFC connection will allow the Web giant to overcome the problems it faced with Google Wallet 1.0.

Google certainly will be able to offer users a much greater choice of issuers than the lone bank, Citigroup, that signed on for the first version of the wallet.

Meanwhile, Apple’s interest in NFC is unquestionable, given all of its patent requests using the technology. But the tech giant’s commitment to NFC, at least for the next iPhone, is by no means certain.

If Apple again snubs NFC this year, it would indicate the company believes that the NFC infrastructure–or NFC technology itself–is still too immature to support its all-out emphasis on device usability.

HEADLINE NEWS

Apple Testing Loyalty Feature; Google Expected to Expand Payments for Home Device

NFC TIMES Exclusive – As they struggle with low user adoption of their respective wallets in the U.S., Apple and Google are seeking to add more features, hoping to increase transactions, NFC Times has learned.

Taiwan Chief Banking Regulator Reveals Apple Pay Card Adds; Samsung Launches Early Access in Country

NFC TIMES Exclusive Insight – The chairman of Taiwan’s banking regulator, the Financial Supervisory Commission, Wednesday revealed just how fast a start Apple Pay got on the island nation, following its launch of the mobile payments service there in late March.

Analysis: Cook Touts Apple Pay's 'Phenomenal Traction,' but Figures–or Lack of Them–Tell Another Tale

NFC TIMES Exclusive Insight – Apple CEO Tim Cook, with typical enthusiasm, touted Apple Pay’s “phenomenal traction” yesterday in a conference call with analysts. But with one exception, he again failed to release any actual transaction figures for the mobile payments service, while also apparently overstating the contactless and NFC acceptance footprint in the U.S.

Analysis: Enabling HCE Payments in Stand-Alone Wallet Vs. Mobile-Banking App? A Look at Ukraine

NFC TIMES Exclusive – Banks planning to launch host card emulation-based mobile payments have a decision to make: Should they incorporate the payments feature in their mobile-banking apps or introduce a separate wallet app.

Samsung ‘Officially’ Launches First Pays Service in Nordics and Middle East; Expands Beta to Two More Countries

NFC TIMES Exclusive Insight – Samsung today said it had “officially” launched its mobile payments service, Samsung Pay, in Sweden and the United Arab Emirates after “early-access launches” in these countries, making it the first of the global “Pays” wallets to fully launch in either the Nordics or the Middle East.

‘Pays’ Not Enough: Two Singaporean Banks to Expand P2P Apps to In-Store Payments Using QR Codes

NFC TIMES Exclusive Insight – Two of Singapore's major banks–both of which are participating in all three of the “Pays” wallets–Apple Pay, Samsung Pay and Android Pay–are expanding their peer-to-peer payments services to in-store payments using QR codes.

More German Banks to Commercially Launch HCE-Enabled Payments

NFC TIMES Exclusive – At least two German banks plan to follow the country's largest bank by assets, Deutsche Bank, in offering host card emulation-based mobile payments to their customers, NFC Times has learned.

PayPal Will Use Discover Acceptance Infrastructure and Tokenization for In-Store Payments with Android Pay

NFC TIMES Exclusive – PayPal will use the Discover Financial Services acceptance infrastructure and tokenization for its move to in-store payments with Android Pay, NFC Times has confirmed.

Samsung Pay Nears Launch in Taiwan; Android Pay Expected to Follow

NFC TIMES Exclusive – Samsung Pay is expected to launch next month in Taiwan, followed by Android Pay, as the two global “Pays” wallets gear up to compete with Apple Pay on the island nation, NFC Times has learned.

Analysis: Following Delays, PayPal ‘Soon’ to Launch Next Attempt at In-Store Payments using Host Card Emulation

NFC TIMES Exclusive Insight – PayPal and Google announced a deal that promises to finally bring HCE payments to U.S. PayPal account holders, after delays–enabling users to pay with PayPal through Android Pay.

Vendor Blames Certification Woes for Slow Rollout of Payments Wearables

NFC TIMES Exclusive – A costly and time-consuming payments wearables certification process is a major contributor to delays in payments wearables getting into the hands of more consumers, Israel-based On Track Innovations’ director of marketing and head of innovations Nir Barr told NFC Times.

With Apple’s NFC Technology Locked, Denmark Tries BLE for Payments

NFC TIMES Exclusive – With Apple showing no signs of backing off its policy of restricting use of its NFC technology to Apple Pay only, banks and payments services providers are looking for ways to enable their iPhone-packing customers to pay with their phones in stores, especially in countries where Apple Pay hasn’t yet launched.