Friday, May 27, 2011

Q&A: How Google Wallet Aims to Replace Everything in Your Pocket

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Apple likes to say "There's an app for that." But now Google's released Google Wallet, which it says is "an Android app that makes your phone your wallet."

Confused? Well, think of it this way. In the same way that credit cards, gift cards, and store loyalty cards replaced carrying cash around, Google's trying to replace all your plastic cards with virtual ones, tied to an app on your phone.

How does that work?

It uses a technology called Near-Field Communication, which is a fancy way of saying "You wave your phone at things and stuff happens." In this case, credit card payments -- plus store check-ins and things that tie into Google's new Groupon-style offering, Google Offers.

So, wait. Couldn't I accidentally pay for something just by getting my phone near the sensor?

No. First, the way Google does NFC with Google Wallet, you don't just put your phone near the sensor; you physically tap it onto it. And second, you have to enter a PIN number first. It's basically like making a credit card payment, but you enter a PIN on your phone instead of signing your name on a PIN pad. And you keep the card in your Google Wallet, instead of your physical wallet.

Is it safe to use virtual credit cards, though?

It'd better be, because we've kinda been using them for years!

Huh?

A credit card isn't like the key to your car, in that you need the actual card to make payments. It's more like the sticky note above your monitor, with the password for your email. It's basically a reminder sheet that has your credit card number written down on it, plus your security code and other info.

They usually need outside data like your signature to complete a transaction, and of course the data's also encoded on their magnetic strips and/or "smart card" chips. But the point is, a thief doesn't need your physical credit card to steal your identity ... just your credit card number, and a few other pieces of information. And Google keeps your credit card info safe in a separate chip called the Secure Element, where no one can get to it except the merchants who receive your payment info.

It needs a special chip? What phones have that?

Just one: The Nexus S. And the way Google says it on the Wallet website, it sounds like only the Nexus S' 4G version on Sprint's network will work.

Dang. What're the other downsides of using this?

First, it only works with MasterCard right now. (Visa's working on its own version.) That means you can only use it at MasterCard PayPass locations, although there's an app to help you find them.

And second, it's Google that's doing this.

Holy cow, is Google stealing our credit card numbers?

No, Google isn't a telemarketing scam artist company. It's an advertising company. That's why it gives everything out for free: The more Google services you use, the more Google knows about you, and the more "targeted" its ads are. How much do you think it would help Google if it knows everything that you're buying?

That's definitely worrisome ...

True. Which may be one reason why it's letting you earn loyalty rewards with Google Wallet, at companies like Subway and Toys R' Us. Google's good at the "giving stuff out for free" part of its business.

Jared Spurbeck is an open-source software enthusiast, who uses an Android phone and an Ubuntu laptop PC. He has been writing about technology and electronics since 2008.

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