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Citi, Mastercard, First Data and Sprint team up with web giant in the US to turn smartphones into wallets

At an event today, Google demonstrated Google Wallet, an app that it is touting will turn smartphones into wallets so consumers can tap, pay and save money and time while they shop.

For businesses, Google and its partners, Citi, MasterCard, First Data and Sprint, said Google Wallet is an opportunity to strengthen customer relationships by offering a faster, easier shopping experience with relevant deals, promotions and loyalty rewards.

“Today, we’ve joined with leaders in the industry to build the next generation of mobile commerce,” said Stephanie Tilenius, Google commerce and payments vice president. “With Citi, MasterCard, First Data and Sprint we’re building an open commerce ecosystem that for the first time will make it possible for you to pay with an NFC [near field communication] wallet and redeem consumer promotions all in one tap, while shopping offline.”

Google Wallet is currently in a field test and will be available to consumers this summer. At the event, Google, Citi, MasterCard, First Data and Sprint introduced Google Wallet and invited additional issuing banks, payment networks, mobile carriers, handset manufacturers, point of sale systems companies and merchants to join the initiative.

Next step in mobile payments

At commercial launch, Google Wallet will support payments with two payment solutions: a PayPass eligible Citi MasterCard and a virtual Google Prepaid card. Most people who already have a PayPass eligible Citi MasterCard can add it to Google Wallet over the air, using First Data's service manager service. Or, they can fund the Google Prepaid card with any payment card.

Google Wallet uses NFC to make secure payments fast and convenient by tapping the phone on any PayPass-enabled terminal at checkout.

Google said the wallet functionality is engineered to enable secure payments and goes beyond what’s possible with traditional wallets and cards. It will require an app-specific PIN and, in the first release, all payment card credentials will be encrypted and stored on a chip, called the secure element, which is separate from the Android device memory and is only accessible by authorised programmes.

“Citi’s role as the lead bank in Google Wallet is the latest demonstration of how we are committed to becoming the world’s digital bank, providing to customers the tools they need to manage their everyday finances with convenience and value,” said Paul Galant, Citi global enterprise payments chief executive. “Today’s announcement and our active collaboration with Google will be looked at as the inflection point for how mobile payments are evolving from concept to mass utilisation.”

Accepted in stores US-wide

Google Wallet has been built to work with the MasterCard PayPass network – a merchant electronic point-of-sale (EPoS) service that enables consumers to use NFC-enabled devices to complete transactions. As a result, Google Wallet will immediately be accepted at more than 124,000 PayPass-enabled merchants nationally and more than 311,000 globally.

“MasterCard has pioneered mobile payments with our PayPass technology and we’re proud that it is at the heart of Google Wallet,” said Ed McLaughlin, MasterCard chief emerging payments officer. “We’re excited to partner with these industry leaders today and committed to continuing to play a leadership role in the development of mobile payment technologies.”

Google is also working with EPoS systems companies and top retail brands to create a new ‘SingleTap’ shopping experience. It will allow consumers to pay for an item using a credit card or gift card, redeem promotions and earn loyalty points with a tap of their Google Wallet.

Google said it is working with VeriFone, Hypercom, Ingenico, VIVOTech and others to develop these next generation point of sale systems. Retailers participating in the new SingleTap experience include: American Eagle Outfitters, Bloomingdale’s, Champs Sports, The Container Store, Duane Reade, Einstein Bros. Bagels, Foot Locker, Guess, Jamba Juice, Macy’s, Noah's Bagels, Peet’s Coffee & Tea, RadioShack, Subway, Toys“R”Us and Walgreens.

“Google Wallet allows us to harness the power of mobile technology to enhance our in-store shopping experience and helps bridge the gap between our online and in-store consumer interactions,” said Martine Reardon, Macy's executive vice-president of marketing and advertising. “Macy's is always looking for cutting-edge technology that will deliver value and engage our customers in personal ways. Google Wallet delivers this unique interaction across channels.”

The first Google Wallet field tests are focused in New York and San Francisco, where many retailers, Coca-Cola vending machines and even taxis are PayPass-enabled, including major outlets such as CVS, Jack in the Box, Sports Authority and Sunoco. First Data, a global leader in electronic commerce and payment processing, is actively recruiting thousands of new merchants in these areas and will soon expand those efforts to deploy more contactless merchant terminals across the country.

“The payments industry has known for some time that it was not a question of if, but when true mobile commerce would become a reality. We believe today is the day that mobile meets payments,” said Ed Labry, First Data president in North America. “We’re proud to play a central role in Google Wallet and to bring innovative technology such as Trusted Service Management and contactless acceptance to our clients.”

Saving made simple

Google also revealed it has been testing a variety of consumer deals that can range from a 20% discount on a new pair of boots discovered on a Google search advertisement; to a $5 off check-in offer received upon entering a store; to a "deal of the day" offering a $20 lunch for $10 at a local restaurant. The aim is that whenever a shopper buys or saves an offer, they will be able to automatically sync it to Google Wallet.

At most stores they will be able to use Google Wallet to show the offer at the register, where the cashier will either scan it or manually type it in. At participating Google SingleTap merchants, shoppers will be able to pay and redeem an offer with their mobile device.

As Google Wallet is a mobile app, its maker said it will start with offers, loyalty and gift cards but some day items like receipts, boarding passes and tickets will all be seamlessly synced to your Google Wallet.

Open commerce ecosystem

Google said its wallet app will work best if it is developed as an open commerce ecosystem so consumers will be able to carry all the credit cards, offers, loyalty and gift cards they choose, along with eventually much more. To this end, Google Wallet will make it possible to integrate numerous types of partners, and Google, Citi, MasterCard, First Data and Sprint invited the banking community, mobile carriers, handset manufacturers, merchants and others to work with Google Wallet.

“We are delighted to be the first carrier to sign on as a partner with Google to deliver Google Wallet,” said Fared Adib, senior vice president of product development for the US telecommunications company Sprint. “As a leading innovator and proponent of ‘open,’ we are proud that Nexus S 4G is the first smartphone with Google Wallet and we look forward to deploying Google Wallet on many of our upcoming Android phones." 

Infrastructure partnerships key

NXP is providing the embedded secure NFC system for Google Wallet. The NXP PN65 NFC mobile transaction system incorporates the NFC radio controller, the embedded secure element and NFC software in a single device.

The embedded secure element enables the payment part of Google Wallet and, according to the provider, uses advanced cryptography to offer a high level of security for mobile transactions. To date NXP said it had deployed over 1 billion units of these secure elements shipped to support mobile payment and bank cards, access management schemes, mass transit infrastructures, device authentication and e-government solutions such as ePassports, driver licenses, national ID and health cards.

“This latest move by Google is truly unleashing the full potential of NFC,” commented Ruediger Stroh, NXP Semiconductors executive vice president and general manager of its identification business. “NXP’s NFC technology essentially converts smartphones into loyalty cards, single-tap location ‘check-in’ devices, concert tickets, coupon carriers, contactless payment devices, transit tickets, and secure keys to access cars, hotel rooms, buildings, and computers – the possibilities are endless. Our technology greatly enhances the mobile user experience from the secure NFC solutions embedded in smartphones and PoS terminals, to the NFC tags embedded in smart posters.”

The first release of Google Wallet is expected to be released on the Nexus S 4G on the Sprint network. It said additional devices with NFC capabilities would follow.

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