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Thursday, September 22, 2011

Google Wallet's tap-and-pay system is simple.

USA Today
by Edward C. Baig
Sept 22, 2011

The other day while buying Tic Tacs at my neighborhood CVS Pharmacy, I didn't pull cash or a credit card out of my wallet. Instead, I paid with a Nexus S smartphone from Sprint. Moments after the clerk rang up the purchase, I placed the back of an Android handset against the point of sale terminal and heard a friendly beep signifying that I had successfully used the phone to pay. The transaction took just seconds.

I've been checking out Google Wallet, the mobile payment app that can transform your cellphone into a digital wallet. On Monday, the search giant began rolling out the app to customers who own the Nexus S through an over-the-air software update. Google had been running Wallet field trials in New York and San Francisco, after first unveiling the pay-by-cellphone venture last spring. I conducted my own tests in Silicon Valley, Manhattan and northern New Jersey.

The pitch to consumers is convenience: an app that promises to help save time and, through loyalty rewards and digital coupons, money. You can store and sync up redeemable Google discount offers inside the Wallet.

I've used the Nexus S to pay at 7-Eleven and Subway, as well from the back seat of a taxicab. The tap-and-pay process is simple. The phone incorporates Near Field Communications or NFC, a short-range wireless technology that makes secure transactions possible.

The Google Wallet app on my test phone was funded by a prepaid Google debit card. Google is encouraging usage, for the time being, by issuing a $10 credit on the card. You can add to the total via any plastic credit card, starting at a $20 minimum. Citi MasterCard holders can use a digital replica of that card. (Don't worry, the full account number isn't displayed.) Eventually you'll be able to use other credit cards. You'll also be able to add favorite loyalty and gift cards to the app. Initially, that feature is limited to American Eagle Outfitters.

For now you can make "tap-and-go" payments at merchants who accept the MasterCard PayPass Network. There are some 140,000 PayPass locations in the U.S., and Google includes a PayPass finder inside the app. Google also has announced licensing arrangements with Visa, Discover and American Express and will add those payment networks to Google Wallet. (Google won't disclose timing.)

Acceptance will take time

Of course, Google Wallet and other initiatives to turn your cellphone into a digital billfold are in their earliest stages. People have paid with cold cash or plastic for generations. Educating the public and merchants about mobile payments will take time.

Google must also make the Wallet app available to other handsets. For the moment, Sprint's Nexus S is the only phone capable of exploiting the Wallet service, though more NFC-capable devices are coming.

And while Google Wallet arguably represents the most ambitious mobile payment initiative to date, it isn't the only one. The ISIS network, formed by the wireless carriers AT&T, T-Mobile and Verizon Wireless, is cooking up its own digital wallet. I already buy coffee from time to time with a prepaid Starbucks card app on my iPhone. I've also tried the free Card Case app from start-up Square. Intuit and PayPal are also in the game. (Not all these efforts involve NFC technology.)

Setting up the Google Wallet account involves creating a four-digit PIN that can help protect the phone should it be lost or stolen. Entering the wrong PIN five times wipes the Wallet clean. You don't have to be connected to a cellphone network, however, nor do you have to open the Google Wallet app to pay.

If prompted at checkout, you are asked to choose to "pay by credit." And then you just tap the back of the phone against the terminal to complete the payment. In some cases you may have to re-enter your PIN, and in some cases the retailer may ask you to sign your name.

At CVS I had to present my physical CVS loyalty card to earn further discounts. It will be a lot more convenient when such loyalty cards are stored inside the Wallet.

I was handed paper receipts each time I made a purchase. Google Wallet records a history of "events" inside the app that signify when you used the prepaid Google card and (in some cases) the approximate location where you completed the transaction. Alas, the name of the merchant and the amount paid does not appear.

Google says refunds are handled as with any prepaid card. But though the CVS clerk told me my refund request went through when I tapped the phone against the PayPass terminal, the refund credit never showed up on the prepaid card inside the app. Google says that can take up to a week.

Some day lots of people may pay for stuff through the Google Wallet or similar ventures. But rest assured you'll carry plastic cards and physical wallets for quite some time to come.