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Sprint Plans to Launch NFC Mobile Wallet as U.S. Wallet War Continues to Heat Up

No. 3 U.S. mobile carrier Sprint is planning to launch its own NFC mobile wallet as early as this summer, NFC Times has learned, as the mobile wallet war in the United States continues to heat up.

Sprint’s wallet plans represent another blow to Google, whose own wallet has been distributed by Sprint, which remains Google’s lone wallet partner among mobile operators.

Sources told NFC Times that Sprint sees advantages in rolling out its own wallet, which according to the sources is named “Touch.” With a wallet, Sprint could build relationships with banks and other service providers. With the Google Wallet, Sprint has virtually no involvement with service providers.

It’s not clear whether Sprint would drop support of the Google Wallet altogether, although it seems unlikely that it could support both wallets on the same NFC phones, since each wallet requires control of the secure element.

“The limitation isn’t the wallet; the limitation is the secure element,” said a source at Sprint, who added the Sprint wallet offers a “legitimate alternative to Isis.”

Isis is the joint venture formed by the three other major U.S. carriers, Verizon Wireless, AT&T and T-Mobile USA, which plan to introduce their Isis wallets this summer in two cities. Sprint had been part of the planned venture, but dropped out in 2010.

The telco is believed to be in the process of trying to sign up banks and other service providers. It plans to open the wallet API, or application-programming interface, to encourage more application developers to develop services, said sources.

“There is a big difference in the way Isis is thinking of doing this and how Sprint is thinking of doing it,” said a U.S. telecom industry source with deep knowledge of Isis. “Sprint has a pretty robust developer ecosystem that the other guys (Isis telcos) don’t have. I don’t know for sure, but they (probably) will leverage that developer ecosystem to have a more open use of NFC in phones, as compared with Isis, which is not open by any means.”

Sprint has hired Silicon Valley-based trusted service manager Sequent Software, which bills itself as promoting an open NFC ecosystem, NFC Times has learned.

And the Touch wallet is likely to support both NFC and cloud-based applications.

UPDATE–June 12, 2012: A pair of presentation slides, purportedly showing how the Sprint Touch wallet would be unlocked and a separate loyalty card section, were posted June 11 by an Android Central blogger, who said the site had obtained the slides from an “insider.” END UPDATE.  

Sprint said in a statement to NFC Times that it is “proud to be the first carrier to deliver Google Wallet,” now available on five NFC phones and soon on the Samsung Galaxy S III. But it added: “In keeping with our open approach, Sprint is actively working with others in the mobile payment ecosystem. We will continue to bring practical, easy-to-use mobile payment solutions to customers on Sprint devices, however, we do not have any news to share at this time.”

Sprint sells nearly all of Google’s wallet phones. In April, it added three new phones, the 4G LTE version of the Samsung-made Galaxy Nexus, along with two phones from LG Electronics, the Optimus Elite and LG Viper 4G LTE. Last week the operator put another high-end phone on sale supporting the Google Wallet, the HTC Evo 4G LTE, which had been delayed. And this week it announced availability in June of the Samsung Galaxy S III with Google Wallet preloaded. Google and Sprint had only offered one phone, the Nexus S 4G, before that.

Sprint does not control the Google Wallet in any of the phones, however. Google owns the master keys to the embedded chip in each of the Android handsets. Google did not respond immediately for a request for comment on the planned Sprint wallet.

Sprint is also expected to use an embedded chip to anchor its wallet, unlike the Isis telcos, including Verizon, which will use SIM cards as secure elements. Unlike Verizon, Sprint isn’t believed to be far enough along in development of its 4G LTE network and LTE SIMs to use the SIMs as secure elements. 

Google’s Wallet Revamp
Meanwhile, Google is revamping its own wallet strategy, planning to make it more cloud-based, sources told NFC Times. The restructuring, called by some “Google Wallet 2.0,” is expected to keep NFC applications, but probably will put more payment and offers and other promotions in the cloud.

It is expected to make use of the company’s acquisition of New York-based TxVia, announced in early April. TxVia provides a payments platform for processing a range of prepaid cards, including general purpose and gift cards, as well as payroll and government disbursement cards. 

More information, or even an announcement of changes to the wallet, could happen at Google’s annual developers conference, Google I/O, scheduled for later this month in San Francisco.

Any move by Google to reduce its reliance on the secure element in the phones hosting its wallet could help it overcome one of the main challenges in its heretofore unsuccessful efforts to expand use of the wallet.

Both payment and related applications in the wallet require Google to control the secure chip. The two largest U.S. operators, Verizon Wireless and AT&T, have been trying to discourage use of the wallet and, it appears, of NFC applications in general until they launch their own Isis NFC wallets.

Verizon has tried to block the Google Wallet by asking Google not to enable Verizon subscribers to download the wallet to the version of the Galaxy Nexus Verizon put on sale late last year. That is despite the fact the Galaxy Nexus is Google’s own phone, made for it by Samsung.

AT&T was not as heavy handed with the Galaxy Nexus. But a marketing director for Samsung Telecommunications America told NFC Times that AT&T instructed the handset maker not to load NFC phone software into Samsung’s hybrid smartphone and tablet, the Galaxy Note, which AT&T introduced in February. “The direction to us was to not enable NFC,” he said.

More Mobile Wallets
Sequent, a two-year-old company based in Silicon Valley, would manage the secure elements for Sprint. But Sequent has declined to confirm it has a contract with Sprint.

CEO Drew Weinstein would only say that “Sequent is managing secure elements for Tier-1 operators, with announcements coming from those operators as they launch later in the year." 

The planned Sprint wallet comes more than two years after Sprint dropped out of the planned joint venture that would become Isis.

A source involved with the formation of the group said Sprint bowed out because it didn’t see a sufficient return on investment from the project given the funding needed.

Isis, which is mainly overseeing the payment piece of the wallets planned by its member telcos, contends it is open to all major payment schemes and related applications, such as loyalty and couponing.

But the telecom industry source said developers and service providers that want to access the Isis Wallet and secure element would have to pay rental fees, if they could access it at all. “That is a very controlled process.”

Besides Isis and Google, Sprint’s Touch will vie for attention with a growing field of wallets.

Depending on how the term, wallet, is defined, that includes PayPal’s mobile-payment service, and forthcoming wallets from Visa and MasterCard Worldwide, the latter a white label product that could be branded by banks or other parties.

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