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.


Citigroup to Launch ‘Citi Pay’ Mobile Payments Service with Help from Mastercard

NFC Times Exclusive – U.S.-based Citigroup plans to soon launch its own NFC-based mobile payments service, Citi Pay, in the U.S. and Asia, in part using technology from Mastercard, NFC Times has learned.

Apple Pay Launch in Japan Opens Up More Opportunities for Third-Party Vendors

NFC Times Exclusive – As Apple moves closer to launching Apple Pay in Japan, the FeliCa-based service is opening up business opportunities for third-party technology suppliers, unlike most other countries where Apple Pay has launched.

Seamless Goes Ahead with HCE Expansion of SEQR Mobile Wallet for European Users

NFC Times Exclusive Insight – Following the initial soft launch of its NFC payments service in its home base, Sweden-based Seamless Distribution, the parent company of the SEQR wallet, is enabling HCE for all European users as it seeks global acceptance of its proprietary mobile payments service.

Apple Pay Expands to Russia with Support from Mastercard and Country’s Biggest Bank

Exclusive NFC Times Insight – Less than a week after Samsung switched on its mobile payments service in Russia, Apple has launched Apple Pay in the country, continuing the international expansion of its NFC payments service to a 10th market.

Reported Qualcomm Deal for NXP Not Expected to Limit NFC Chip Availability

Oct 4 2016

NFC Times Exclusive Insight –  If a planned acquisition by Qualcomm of NXP Semiconductors, as reported, were to go through, it would not affect supplies of NFC chips to smartphone makers using other processor chips, said an expert.

Samsung Pay to Launch in Russia with Support from Mastercard and Limited Number of Banks

Sep 30 2016

UPDATED: NFC Times Excusive Insight – Samsung Pay is expected to launch in Russia tomorrow, beating Apple to the market, which disclosed earlier this month that it plans a Russian launch of Apple Pay before the end of the year.

Two Major Taiwanese Telcos Plan to Adopt HCE, as They Deal with TSM Troubles and Imminent Arrival of OEM Pay

Sep 26 2016

NFC Times Exclusive –  In the first cases of its kind to come to light, two of Taiwan’s largest telcos are planning to support host card emulation in their wallets, as they seek to overcome problems with their joint TSM and to prepare for the coming of OEM Pay to Taiwan, expected in the first quarter of next year, NFC Times has learned.

Prepping for the Pays: Far EasTone Offers Range of Wallet Services It Believes Apple Can’t Match

NFC Times Exclusive – With the expected arrival of such OEM Pay services as Apple Pay and Samsung Pay as early as the first quarter of next year, Taiwan’s major telcos are gearing up to keep their own mobile wallets competitive.

Czech Banks See Opportunity for Deploying HCE Mobile Payments

NFC Times Exclusive – Czech banks are looking to capitalize on a growing contactless point-of-sale infrastructure in the country, with two of the five largest banks there having already launched HCE-based mobile payments and the others looking to join the market, NFC Times has learned.

OEM Pay Services Drive Renewed Interest in NFC Transit Ticketing, Especially in China

Sep 28 2016

NFC Times Exclusive – The planned launch of NFC transit ticketing in Japan next month with Apple Pay shined the spotlight on the emergence of closed-loop NFC transit ticketing–which has been seen as a prime application for NFC phones but one that has disappointed NFC backers for years.

Analysis: Agreements with Visa, Mastercard and Earlier Deal with Discover Could Help PayPal Reverse Years of Failures at Physical Point of Sale

NFC Times Exclusive Insight – Agreements that were announced with Visa, Discover and, last week, Mastercard may finally help PayPal reverse years of failed attempts to enable customers to pay with its PayPal Wallet in stores.

Analysis: FeliCa Mobile Payment and Ticketing Nothing New in Japan, as Apple Strains for Apple Pay Developments to Spotlight

NFC Times Exclusive Insight – Apple Wednesday confirmed that its new iPhone 7 smartphones and second-generation Apple Watch will support Sony’s proprietary FeliCa technology in Japan, as earlier reported, enabling transit and retail payments when Apple Pay launches in Japan next month. The tech giant will also expand Apple Pay into New Zealand and Russia this year, though was able to announce only one issuer so far between the two countries.