What is Google Wallet?
Google Wallet is smartphone software that was developed for Google Android phones and is intended to replace credit card processing. With Google Wallet technology, a user can make a payment by tapping a smartphone and entering a four-digit security code during the ordering process. Google Wallet also includes SingleTap functions, in which the wallet software stores a user's digital coupons, loyalty points and Groupon-like offers. This information facilitates transactions, discounts and the accumulation of reward points with a single tap of a phone on a Near Field Communication (NFC) reader.
While Google Wallet technology is still in its infancy, it is expected to expand across the retail market over the next several years. In addition, Google Wallet is compatible with all Google Android phones and all major credit cards.
Version 1.0 of Google Wallet was released in 2011. This first software version only runs on the Google Nexus S - one of the few smartphones with the required NFC chip.
Google has teamed up with MasterCard to give Google Wallet 1.0 the identity of Citibank MasterCard. However, Google assumes that the technology will work with all major credit cards in the future. Google Wallet is accepted by 150,000+ retailers in the US and 230,000 overseas. In fact, Europeans and Asians routinely use smartphone technology to process payments.
A Google Wallet user must set up a four-digit PIN that must be entered before purchasing. While this makes the SingleTap technology less convenient, Google strongly believes that the PIN is an important security measure that prevents unauthorized purchases in the event a phone is lost or stolen.
Google Wallet stores a user's credit card information in an encrypted format on a smartphone computer chip known as a secure element. This chip is separate from the phone's memory and can only be accessed by Secure Element programs. This system protects a user's credit card information when it is transferred from the phone to the NFC reader. To prevent the credit card from being skimmed, the NFC chip is completely disabled when the phone screen is turned off.