The mobile wallet has arrived, at least in a limited form, as was announced today at Google's press event in New York City. The company announced two new products, the NFC-based Google Wallet and Google Offers.
The two products constitute the realization by the wireless industry of a long-imagined solution that would allow users to replace physical cards, such as credit cards, driver's licenses and loyalty cards, with their smartphones.
Stephanie Tilenius, vice president of commerce at Google, plainly stated, "Your phone will be your wallet...just tap, pay, save," according to a live blog of the even posted on Engadget.
Today's demonstrations of the technology showecased the way initial pilot partners, such as American Eagle, are alrady using Google Wallet and Offers in their businesses today. Users can find offers in emails and online, which are then saved to Google Wallet. When the user pays for goods or services at an NFC-enabled Point of Sale (POS) terminal, discounts are automatically applied and the transaction is completed using a credit card or prepaid Google card stored in the wallet.
Google used the latest Nexus S device, which was one of the first smarpthones to come equipped with NFC, to demonstrate how the digital wallet will work.
Rob von Behren, a secruity expert for Google, was on hand at the event. He explained the the chip that Google uses, the NXP PN65, will not activate without the user having first met various requirments. "The chip itself is only turned on when the wallet is opened and unlocked, meaning you don't have to worry about someone scanning your card when you're just walking down the street," von Berhren said.
Limited pilot programs are currently running around the country at various retail outlets. Citibank and Sprint were also named as partner, but the company promises many more to get invovled as things move forward.
While today's announcement has been a long time in coming, you might not want to throw away your plastic and old-fashioned wallet just yet. Adam Blum, CEO of Rhomobile, whose company recently added NFC capabilities to its developer platform, says Google's announcement is just the tip of the iceberg.
Blum said that a standards-based approach is a definite sign of maturity for NFC technology, but also said that near-term Google Wallet and Offers will mainly serve to drive a broader ecosystem of non-payment related NFC applications.
"Over the shorter term, this is going to drive NFC-based solutions like device-to-device communicataions, NFC-tagged objects, NFC-based inventory solutions...Those things are going to happen sooner than ubiquitous NFC-based wallets," Blum said.
Blume said that the idea of taking your phone back to the front of the store and simply tapping your phone at POS terminal, as opposed to sliding a credit card through the machine, is really not the end-all for the way this technology could change consumer habits.
"I hope that long term the partners in this space will leverage NFC tags. The way you'll actually purchase in the future, you'll go in and make the purchases as you go by tapping your phone on the tag of each individual item, and there won't be this dedicated NFC reader device that you touch your phone to at the front of the store," Blum said.
Blum’s comments address a huge challenge ahead for ubiquitous adoption of NFC-based payments, namely the fact that POS terminals at businesses across the country will have to be retooled to accept this form of payment.
Shares of Google’s stock were down 2 points, to $515, in afternoon trading.