Google Building an NFC Mobile Wallet; U.S. Banks are Interested

Jan 6 2011

Google is building a mobile wallet nicknamed "Cream," which it plans to integrate with Android NFC phones that consumers could tap to pay in stores, sources told NFC Times. Among banks showing strong interest is U.S.-based Citigroup.

At least one other major U.S. bank has expressed interest in Google’s NFC mobile-payment initiative, JPMorgan Chase, said a source, who added that MasterCard Worldwide and Visa Inc. have also been in talks with Google about possible participation in the Web giant’s plans to launch the wallet and enable a mobile-payment and advertising service on NFC smartphones. Among those phones is expected to be Google’s own Nexus S, said sources.

If the parties go ahead with the plans, an announcement of a launch could come early this year, with some sources predicting it could happen in a matter of weeks. Several Android-based NFC handsets are expected on the market this year, but at present there is only one, the Nexus S, launched last month, which still doesn’t support payment.

'Cream' of the NFC Phone Crop?
But contrary to reports Tuesday, most sources agree that Google is not planning its own mobile-payment service. Instead, it would likely act as an enabler for mobile payment by banks and other payment service providers as part of a strategy to capture mobile advertising revenue for itself. In particular, Google would target consumers when they are in the store or right at the point of sale terminal.

Google makes the vast majority of its revenue now from advertising on the fixed Internet, but as more and more Web browsing and searches move from desktops and laptops to smartphones, Google needs to adapt its business model. With mobile phones, the company could locate consumers using global positioning or NFC’s tag-reading capability and charge advertisers, such as merchants and consumer products companies, for access to shoppers.

"Google is not interested in becoming the next MasterCard; they’re interested in enhancing the payment device with pinpoint accuracy for advertising and marketing," said a source with knowledge of the initiative. "It’s the holy grail of every marketing company–to impact the consumer in the place where they can buy."

The Cream wallet would be a default feature on Android phones, just like Google Maps. And just as Maps uses GPS to help render its services, Cream, or whatever the wallet app would be called, would have NFC technology as an enabler, said a source.

At present, the Nexus S and the latest version of the Android operating system running on it, called Gingerbread, only supports tag reading. As part of its Hotpot service, Google has launched a pilot enabling consumers with the Nexus S to tap NFC-tags displayed by merchants in their store windows in Portland, Oregon. With the service, users could pull down information about the merchants, including reviews and recommendations, and Google could gain information about the users, said Nick Holland, senior analyst with U.S.-based technology research and consulting firm Yankee Group.

"While the mass media is lit up about Google becoming the next Visa or MasterCard, they are totally missing the point," Holland told NFC Times. "Google makes 97% of its revenues from advertising and will continue to look for ways to do this. There is a huge dormant opportunity for them with physical world merchants. Tapping an NFC-enabled phone at a physical merchant location is equivalent to clicking an advertising link to get to a Web page–it is evidence that a potential consumer has been there and, for Google, monetizeable. Why would Google want to squabble over interchange fees and transaction share when they can own location-based advertising instead?"

Citi and MasterCard perhaps see the Google m-wallet initiative as a way to gird for expected competition next year with the Isis joint venture made up of three of the top four mobile carriers in the United States, Verizon, AT&T and T-Mobile USA. The telcos plan to introduce their own payment brand at the point of sale, using the Discover Financial Services retail network. They also are keen to use NFC phones sporting the popular Android platform–in this case, to load with their Isis application.

This might create a battle for control of the primary secure element in the phones, where the payment applications would be stored. Many of these secure elements are expected to be embedded chips, as in the Nexus S, not on SIM cards, which are strictly under the control of cellular operators that issue them. But since mobile operators in the U.S. exercise much control over distribution of phones to subscribers, they might also demand control of the master keys from handset makers to any embedded secure chip in the phones.

One source also said Chase and Visa have expressed interest in working together on a prepaid payment application for the Google wallet. Google had also tried to recruit Bank of America, which was initially receptive, but then dropped out, said the source.

Citi and MasterCard could not be reached for comment. A spokeswoman at Chase said the bank would not comment "on this speculation." Visa declined all comment when reached.

"If this is true, it will make an enormous splash in the market," said Todd Ablowitz, president of the U.S.-based payments consulting company Double Diamond Group, speaking of a possible launch of mobile payment by Citi and MasterCard involving Google, given the Web giant's powerful consumer relationship.

Going Beyond Stickers and microSDs
Citi and MasterCard are working together on a passive-sticker program, launched last spring, which to date is Citi’s only actual mobile-payment offer at the point of sale. But the bank has indicated that much more is to come with NFC and contactless-mobile payment. Chase and Bank of America have been testing contactless microSD cards with Visa. All three banks have participated in NFC phone trials.

Visa may not be so keen to be part of the Google wallet, said a source, but its banking customers are clamoring for products they can use to enter the mobile-payment market and ward off feared competition at the physical point of sale from such payment services providers as PayPal and the Isis joint venture. Visa’s only answer so far to these threats have been some shopping apps and its contactless microSD card program, which some say is not yet ready for the market.

"Visa is trying hard to remain in the race," said a source.

Even with the banks and card networks involved, launching NFC payment will still be a challenge. At present, fewer than 2% of merchant point-of-sale terminals in the United States support payment from contactless cards or NFC phones.

Some observers believe Google might want to introduce payment, but mobile advertising still would be at the core of the company's strategy for making money with NFC phones. One option would be for Google to bypass the problem of the scarcity of readers at the point of sale by using low-cost tags. Consumers could tap their NFC phones on the tags at the point of sale and conduct cloud-based payment transactions. Instead of an actual payment application stored on a secure element in the phone, perhaps a credential of some type would be secured there, authenticating the user to the network.

"The next wave of eyeballs at devices will be with mobile smartphones," said Charles Walton, chief operating officer for NFC chip supplier Inside Secure, who sees the cloud-based payment option as viable. "Based upon their current business model, I might theorize that their (Google's) next step could be mobile NFC commerce services that are a giveaway to gain continued and growing dominance in their core-revenue segment of advertising. This would turn the industry upside down."

Article comments

 
AlexanderViken Jan 12 2011

But would you trust a device running Android to handle your financial data? As long as Google doesn't enforce some sort of control, or build control into the OS, Android will have a hard time to gain the needed trust it needs i think.

http://agilemobility.net/2011/01/android-virus-alert-androidos_geinimi-a/

Dan Balaban's picture
Dan Balaban Jan 12 2011

It's likely Google or other parties involved in the wallet, such as banks, would use the secure element to store credentials, encryption keys, etc. In the Nexus S, that secure element is an embedded smart card chip.

Please register or login to post a comment.

HEADLINE NEWS

Sydney to Test Multimodal Payments Involving Private Mobility Providers Using Digital Closed-Loop Card

NFC Times Exclusive Insight – A trial to be held later this year in Australia’s largest city, Sydney, if it proves successful, could offer one example for how agencies can encourage customers to take multimodal transport combining public and private operators. The economics behind the New South Wales government’s trial offer are unclear, however.

Rome Transit Operator: Covid Accelerates Demand for Contactless Payments but Customer Habits Hard to Change

NFC TIMES Exclusive Insight – The CIO of Italy’s largest public transit operator, ATAC SpA, said the Covid-19 pandemic has accelerated demand for open-loop contactless and mobile payments, but added that old habits are hard to break for customers and use of cash and paper tickets are still popular.

Dubai Transit Authority Plans to Launch Its Closed-Loop Card in More NFC Wallets

NFC TIMES Exclusive Insight – Dubai’s Roads and Transport Authority, or RTA, which in December first launched mobile fare payments with a digital version of its closed-loop card in Huawei smartphones, says it plans to expand the service to other OEMs, including Apple and Samsung.

Case Study: Transit Agency in Portugal Combined NFC with BLE for Mobile Ticketing; Faced Challenges

NFC TIMES Exclusive Insight – The agency that runs ticketing for 19 public bus, tram and train operators serving Porto, Portugal’s second largest city, says it has had success–and faced several challenges–with the rollout of its Anda mobile-ticketing app.

OMNY Hits New Usage Milestone as Open-Loop Payments Rollout Continues

NFC TIMES Exclusive Insight – New York’s Metropolitan Transportation Authority, or MTA, says it continues to see steady growth of its open-loop fare payments service, OMNY, announcing 50 million taps by customers using NFC wallets and bank cards to ride the massive New York City Subway and the city’s buses.

In-Depth: Contactless Open-Loop Pilot in Spain First Project from Vendor Partnership

Mar 11 2021

NFC TIMES Exclusive Insight – Bilbobus, which operates bus service for the city of Bilbao, in northern Spain’s Basque region, says it launched its recent trial of con

Moscow Metro Plans Rollout of ‘Face Pay’ Technology for Fare Collection

NFC TIMES Exclusive Insight – The Moscow Metro plans to roll out facial-recognition technology at every station by the end of 2021 to enable customers to pay fares, officials say. The project, while delayed, would be the largest of its kind globally.

Stockholm Transit Agency Launches Open-Loop Fare Payments for Multimodal Rides

NFC TIMES Exclusive Insight – Stockholm Public Transport, or SL, the city-owned company that oversees major public transport in the city, is the latest agency in Europe to launch open-loop fare collection, offering multimodal rides with a tap of a contactless EMV bank card or NFC device.

Case Study: Amsterdam Transit Operator Seeks to Go Nearly 100% Digital for Ticketing to Cut Costs and Enhance Service

NFC TIMES Exclusive Insight – GVB, Amsterdam’s largest public transit operator, says it seeks to replace an aging closed-loop fare card system and go to open-loop and other digital tokens with the planned rollout of its new account-based ticketing system.

Google Announces Plans to Enable Public Transit Ticketing in Maps App along with Rollout of Parking Fare Payments

NFC TIMES Exclusive Insight – Google has announced plans to launch public transit ticketing for more than 80 cities globally in coming weeks from its trip-planning Maps app and also to enable users to buy virtual closed-loop fare cards–starting with the Clipper card in the San Francisco Bay Area–directly from the app. That’s in addition to enabling payments for parking in more than 400 U.S. cities.

UPDATED: U.S. Federal Government Awards Grants to Help Transit Agencies Roll Out Contactless Payments and Mobile Ticketing

Feb 18 2021

NFC TIMES Exclusive Insight – U.S. public transit agencies have been keen to remove cash and paper tickets from their buses and trains and to keep more distance between customers and agency staffers because of the Covid-19 pandemic. Now they are getting a new boost from the U.S. federal government in the form of grant funds to enable them to enhance contactless and mobile payments systems, among other measures.

German Transit Agency Plans to Complete Open-Loop Rollout on Buses and Trains This Quarter, Expand to Other Mobility Later

NFC TIMES Exclusive Insight – German transit agency SWB Bus and Bahn plans to fully roll out its contactless EMV fare payments service BONNsmart to its bus and train lines by the end of the first quarter, after launching a pilot last fall, confirmed a spokesman, who added that plans call for eventually expanding the contactless service to payments for parking and such micromobility modes as e-scooters.