Digital Transactions Authoritative, insightful and timely information for payments professionals
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Feuding between the leading mobile-telecommunications carrier and Google Inc. over mobile wallets broke into the open this week with reports that Verizon Wireless would block the Google Wallet application from being installed on the new Samsung Galaxy Nexus smart phone.
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Verizon Wireless denied such reports, but a statement it issued and one from Google seem to indicate that the Google Wallet application won’t be available on the Galaxy Nexus phone when Verizon Wireless starts selling it, possibly as soon as this month. Google developed the phone with Samsung Electronics Co. and it runs Google’s Android operating system, now the most popular platform for smart phones. It is also one of the few smart phone models available with near-field communication (NFC) capability, a key technology for Google Wallet and other contactless mobile payment programs.
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Verizon Wireless along with carriers AT&T Inc. and T-Mobile USA have their own mobile-wallet joint venture called Isis, which is expected to launch next year in two cities. Like Google Wallet, Isis uses NFC for processing payment and loyalty data.
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A Verizon Wireless spokesperson did not respond to a Digital Transactions News question about whether the carrier was trying to prevent a rival wallet from running on its phones. Instead, the company issued a statement at mid-day Tuesday saying that, “Recent reports that Verizon is blocking Google Wallet on our devices are false. Verizon does not block applications.” Such reports appeared late Monday and Tuesday in Silicon Valley tech publications and the Wall Street Journal’s online edition.
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The statement goes on to say that, “Google Wallet is different from other widely available m-commerce services. Google Wallet does not simply access the operating system and basic hardware of our phones like thousands of other applications. Instead, in order to work as architected by Google, Google Wallet needs to be integrated into a new, secure and proprietary hardware element in our phones.”
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Verizon Wireless is “continuing our commercial discussions with Google on this issue,” the statement says.
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The carrier’s statement seemed to contradict one Google put out earlier Tuesday regarding the new Samsung smart phone. “Verizon asked us not to include this functionality [Google Wallet] in the product,” Google’s statement says. A Google spokesperson did not respond to a Digital Transactions News request for comment about the Verizon Wireless statement.
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Behind the official statements lies a battle for control over customer data as carriers, payments companies, and tech firms such as Google jockey for position ahead of a hoped-for explosion in mobile commerce. Carriers control the so-called SIM cards in mobile phones, which also can handle NFC functions, including payments. But Google Wallet has a separate so-called secure element, or NFC chip, that holds the payment credentials.
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Mobile-payments consultant Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group, sees Verizon Wireless’s statement as making “a distinction without a difference.”
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“They’re not saying that they won’t allow the Google Wallet, they’re saying they’re concerned about the hardware piece,” he says. “The reality is that with 2011 technology, without the hardware secure element you cannot have a fully functioning Google Wallet. Therefore by arguing about the hardware, Verizon Wireless is trying to make it that Google Wallet cannot be on their network.”
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The tussle between Google and Verizon Wireless also is one more example of the difficulty all parties are having in rolling out smart-phone-based services that replicate the accounts consumers can access through their physical wallets. Both merchants, which must install contactless terminals that communicate with NFC phones, and consumers need to be convinced of a mobile wallet’s value, which the providers are trying to enhance by offering electronic coupons and loyalty programs in addition to payments.
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Google Wallet debuted in May on the Samsung Nexus S NFC-enabled phone available only through the fourth major U.S. carrier, Sprint Nextel. The phone holds a Citigroup Inc. credit card account and a Google prepaid card account, both of which use MasterCard Inc.’s PayPass tap-and-go contactless technology for payments. Google Wallet reportedly has about 30 merchants in its camp.
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Isis has only one announced merchant, the Utah Transit Authority, though the company says it is recruiting more and is working with all the major payment networks. Isis also is recruiting some big issuer partners, including JPMorgan Chase & Co., Capital One Financial Corp., and possibly U.S. Bancorp, according to the NFC Times online publication.
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“We are set for 2012 being the year in which Google Wallet and Isis battle it out,” says Ablowitz.
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One indicator of the rough road Google and banks that prefer a secure element separate from the SIM card face in rolling out mobile wallets came in the form of a press release issued Nov. 16 by the GSM Association, a global trade group of nearly 800 wireless carriers and 200 handset makers, software companies, and related firms. The release said 45 leading carriers had committed to SIM-based NFC services, mentioning Isis and its three backers by name.
