Google unveils Google Wallet

The app uses near field communications to complete transactions

Google unveiled its new mobile wallet app Google Wallet on Thursday. The good news is that it’s awesome. The bad news is that it’s extremely limited. For now.

But let’s focus on the positives for now. Unlike other mobile payment apps, the Google Wallet app uses near field communications to securely transmit payment details from your phone to a merchant in a brick-and-mortar store. To pay, you simply enter your Google Wallet PIN and then touch your phone to the payment terminal, which instantly reads your payment details and completes the transaction.

Even better, you don’t need a network connection to pay. Your phone need only be powered on to pay using Google Wallet. And it’s secure. Your financial information is stored in a chip called the Secure Element, which is isolated from your phone’s main operating system and hardware. Only authorized programs like Google Wallet can access the information, and even then, it can only do so after you’ve entered your PIN. The chip is designed so that malicious applications won’t be able to access the information, and even Google Wallet itself has only limited access—it can’t read or write data from its memory.

Which brings us to the bad news. The Secure Element is only available in the Nexus S 4G, which means Google Wallet is only compatible with the Nexus S 4G. At today’s demo of Google Wallet in New York, Google said that it would be willing to partner with other smartphone makers—specifically naming off Apple, Microsoft, and RIM. It’s all a matter of whether certain manufacturers (cough: Apple) will be willing to make the necessary hardware changes and cooperate with Google. So now you see why this will never be available on the iPhone. Unless Apple creates its own NFC-based mobile wallet…

The other downside is the fact that the payment methods are limited to MasterCard PayPass and the Google Prepaid Card. Visa-using iPhone owners are left in the dust. But there is a silver lining to that cloud: Google says that the MasterCard PayPass is just the beginning. It’s hoping to partner with a broad range of financial institutions to get other cards on Google Wallet.

Indeed, Google has big dreams for Google Wallet: “Because Google Wallet is a mobile app, it will do more than a regular wallet ever could,” wrote Google Wallet founding engineers Rob von Behren and Jonathan Wall, in a Google blog post. “You'll be able to store your credit cards, offers, loyalty cards and gift cards, but without the bulk. When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you. Someday, even things like boarding passes, tickets, ID and keys could be stored in Google Wallet.”

Image source: Google.com