by Claudia Bruemmer

After nearly four months of testing, Google Wallet launched September 19th, providing mobile payment access to a select group of people. Initially, it has only a handful of merchant and retail partners, and has only one handset enabled with its Near Field Communication (NFC) system − the Sprint Nexus S. However, users will be able to affix a sticker to their phones making them NFC-enabled. Future Android handsets will have an embeded NFC chip.

With its limited availability, the Google Wallet launch is said to be mostly symbolic. However, because of Google’s popularity, Wallet mobile payments stand to gain traction despite all the competition from Amex, Intuit, PayPal, Square, Visa and the wireless carriers. Not all competitors are using NFC, and it remains to be seen if NFC becomes dominant.

Using Google Wallet involves a change in consumer behavior, which may be a challenge. People are used to swiping their plasticcards and may not quickly alter their behavior unless they get incentives to adopt mobile payments. Additionally, consumers always have security fears. However, NFC payments are said to be more secure than the currently preferred plastic payments.

Regardless of the barriers, the launch of Google Wallet signals a new era of mobile payments in the U.S. These transactions will gather actionable data for marketers in the form of targeting and tracking for online ads/offers, in-store redemption and data gathering for retailers.

How Does Google Wallet Work?

Google Wallet allows your phone to act as your credit card by using the Near Field Communication (NFC) system built into the handset. By tapping your Android phone against a compatible card reader available in select retailers, your payment data are transferred to the merchant without swiping a physical card into a credit card terminal.

While some people might be afraid to combine their phone with their credit cards since phones can be stolen or lost, Google Wallet issupposed to be more secure than swiping a card in a terminal. If the phone’s screen is turned off, the transmitter chip can’t be powered and does not store data, which prevents any lurking hackers from skimming your card. Additionally, if you haven’t used Google Wallet in the last 30 minutes, or if you manually lock it, you must enter your PIN before anyone can use your cards or even see which cards your Wallet holds.

The inconvenience is that Google Wallet doesn’t work everywhere. It won’t work at every site that has an NFC-friendly card reader because Wallet requires the NFC readers to be updated with the latest specifications, and not all retailers have updated. However, you can use the included MasterCard PayPass app to find and display all compatible retailers near your current location, or any location you input manually.

One obstacle to Google Wallet proliferation is the availability of updated card readers everywhere. Actually, the readers are not Google Wallet specific − it’s the same reader currently used by Visa, AmEx and Mastercard – but the readers need to be based on the latest specs. In the meantime, until these readers are everywhere, you’ll have to swipe your credit card manually in the terminal.

The Google Wallet app is well designed and also intuitive to use. It has four sections: Payment Cards, Loyalty Cards, My Offers, and History.

• Payment Cards display all your Google Wallet credit cards, and you can set any one as the default.
• Loyalty Cards look a lot like Payment Cards, but are meant for special offer cards like “Buy 2 lunches and 2 drinks, get one lunch at half price.”
• My Offers display any nearby promos you’ve purchased through the daily/local deals app, Google Shopper.
• History currently displays only the timestamps of your recent transactions with no details on where it was used or how much was spent. This section is not yet complete, and will be finalized later.

While Google Wallet is very impressive, the current launch is just the beginning of the mobile payments era, which will take time before large-scale acceptance and mainstream use.