There was a time when there was no plastic money (i.e., debit cards, credit cards etc) and also there was a time when there were no phones which we could carry around. Over the years the way we pay for our purchases have changed and more often than not we all use plastic money to pay. Similarly with the advent of mobile phones we remain connected everywhere we go. So now how about combining the above two and allowing the people to do both using a single device. Yes that's what Google is planning to do and with the launch of an app called Google Wallet, would allow the users to wave their mobile phones at the retailer’s terminal to make payment instead of cash or credit card.

Google is currently testing it in USA(as of May 2011) and starting this summer they plan to make this available on Nexus S phones. The Google Wallet is powered by Near Field Communications which is incorporated into a chip and this was one of the high points of the Google Nexus S when it was launched. This would allow the users to swipe their mobile phones literally at around 124000 outlets. This service would be in collaboration with MasterCard and will also work at some 300000 merchant locations outside USA as well.

The vision of making this reality globally will surely take a lot of doing. Fir the success of this project there is a need for collaboration between the various stakeholders. In this case it would be cellular carriers, banks, credit card issuers, payment network, mobile phone manufacturers and retailers. Over the last few years various companies have tried to make this a reality but with little success. But now with Google being involved, we can be pretty sure that it would form some shape which can be expanded by others in the future.

So how does Google make money from this app? With Wallet, Google plans to offer promotions and deals to consumers. For example it plans to introduce "Google Offers" which are basically advertising deals from businesses which tie up with them. This is similar to the ones offered by Groupon , Snapdeal  etc. Google will take a certain fee from the participating retailers every time a purchase happens through those coupons. So how does MasterCard make money, the same way in which it would in case of credit card transactions. So it would be a win-win situation for all the stakeholders as none would be impacted as their revenues would be protected and with the growing Internet population it would actually increase in the future.

Google Wallet is actually a new concept and for it to be accepted and functional worldwide would take some time. The regulations in different countries would also be a hindrance for the rollout throughout the globe. Also there needs to be a tie up with various retailers to actually accept such kind of payments. The security issues also need to be addressed. With some business intelligence in place it would actually benefit the customer’s  making their  selection of items the next time they enter the store. The concept is indeed a path breaking one and would dictate the way the shopping and payments happen in the future.

1/12/2011 03:05:38 am

Seems like this would be difficult to implement in countries like India where things aren't too organized.Lets see how their trial run goes off in the US.
@Sayantan - Very informative and well-written

1/12/2011 10:27:33 am

Yeah Indeed.have to look out for that..
Thanx meenu :)

30/5/2012 10:38:41 am

good post


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