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

In-Depth: Atos Offers €4.3 Billion to Acquire Struggling French Vendor Gemalto

Dec 14 2017

NFC TIMES Exclusive Insight – French IT services group Atos hopes to bolster its cybersecurity, IoT and payments offers with its €4.3 billion (US$5.07 billion) unsolicited bid to buy struggling France-based smart card and digital security vendor Gemalto.

Mastercard Quietly Certifies First Data and PayPal to Tokenize Mastercard-Branded Cards

NFC TIMES Exclusive – Mastercard has opened up tokenization of Mastercard-branded card accounts to two other major payments industry players, First Data and PayPal, enabling them to tokenize Mastercard-branded cards for mobile and other digital payments services as an alternative to Mastercard’s own token service, MDES, NFC Times has learned.

Apple Launches P2P Payments Featuring Own Digital Payment Card; Should Banks Worry?

NFC TIMES Exclusive Insight – A key part of Apple’s new Apple Pay Cash peer-to-peer payments service is its digital prepaid debit card–which can be used for in-store NFC purchases and other transactions–a first for the tech giant.

Target Shuns NFC and Apple Pay as Expected with New Wallet; Service Features Private-Label Card

NFC TIMES Exclusive Insight – Target has added its long-anticipated 2-D bar code-based wallet to its mobile app, following rival Wal-Mart Stores in launching its own payments service and shunning NFC and contactless, as expected.

Belgian Domestic Debit Network Seeks to Expand Use of Mobile Payments, Though Consumer Habits Hard to Break

Dec 1 2017

NFC TIMES Exclusive Insight – Belgium’s domestic debit network Bancontact is offering both QR code and NFC-based mobile payments services with 20 banks in the country, as backers seek to expand use by consumers of mobile and contactless payments, which each make up only around 1% of total Bancontact transactions.

Korean and Taiwanese Banks Test Loyalty Points Exchange Using Blockchain

NFC TIMES Exclusive Insight – KEB Hana Bank of South Korea and Taishin International Bank of Taiwan have demonstrated the transfer of bonus points and purchase of coupons using Blockchain technology, with KEB Hana Bank planning to launch initial service for visitors to the Winter Olympics next February in Pyeongchang, South Korea.

Norwegian Banks Move to Defend Against Global Tech Giants by Uniting Payments Services

NFC TIMES Exclusive Insight –  The “Pays” wallets, such as Apple Pay and Android Pay, have not yet launched in Norway, but Norwegian banks are not waiting for tech giants Apple and Google or other outside behemoths, such as Facebook, to try to gain a foothold.

Shared and Limited-Use Tokens and Other Changes: Tokenization 2.0 Explained

NFC TIMES Exclusive Insight – The second version of EMVCo’s payment tokenization technical framework adds two new token use cases aimed primarily for e-commerce and in-app payments, along with a few new assurance and authentication features, but much of the focus of the version 2.0 has been on restructuring and clarifying issues from the first version of the tokenization framework released more than three years ago, according to EMVCo in a webinar.

First Data Expected to Begin Tokenizing Mastercard-Branded Cards Next Year; Visa More Restrictive

NFC TIMES Exclusive –  Big U.S. acquirer and processor First Data plans to generate its own tokens for Mastercard-branded card accounts next year, NFC Times has learned, and a source says First Data is also in discussions with Visa to do the same, but Visa may not allow the processor to tokenize Visa-branded cards in place of the network’s own Visa Token Service.

Visa Launches Program to Promote Contactless Transit Payments

NFC TIMES Exclusive Insight – Visa has formed a unit to promote use of Visa-branded contactless cards and accounts on NFC phones and other devices, seeing an opportunity to expand on the success of open-loop fare collection in London and plans for the move by transit authorities in a growing number of cities, including New York, to accept contactless credit, debit and prepaid bank cards for fares.

USA Technologies Seeks to Bolster Services, Markets with Acquisition of Cantaloupe Systems

NFC TIMES Exclusive Insight – Unattended point-of-sale vendor USA Technologies expects to close its $85 million deal to acquire competitor Cantaloupe Systems next week, telling NFC Times the deal will add to USAT’s suite of services and expand its international reach.

Orange Cash Gets New Life as Part of Orange Bank App

NFC TIMES Exclusive Insight – As expected, Orange will continue offering its NFC-enabled Orange Cash Visa-branded card with the launch of its Orange Bank mobile service.