On Sept. 19, 2011, Google Inc. rolled out the first version of Google Wallet, its mobile payments venture that initially allows Sprint Nextel Corp. customers with Nexus S 4G phones to not only store virtual credit cards but also store virtual prepaid cards on smart phones. The wallet supports the Google Prepaid Card and private-label gift cards offered at participating merchants, as well as the Citi Platinum Select MasterCard, a credit card issued by Citibank N.A.
Google Wallet is the result of a partnership that includes Citibank, MasterCard Worldwide, First Data Corp. and Sprint. "As one of the partners in this launch for Google Wallet, we certainly wanted to make sure that, as we approached the consumers, we provided them as broad of an opportunity to use Google Wallet," said George Zirkel, Vice President Mobile Solutions for First Data.
To spur use of Google Wallet, $10 is loaded onto the virtual prepaid card after users download the wallet to their phones.
As a trusted service manager, First Data delivers Google's virtual accounts to consumer handsets. "We're tied into the infrastructure of Google Wallet by facilitating provisioning of any card type down to the wallet and by providing other technologies that are unique to prepaid," Zirkel said.
One of those technologies is First Data's Money Network. "We provide the Money Network account along with all of the technology, from being able to run those transactions as well as reload the account," Zirkel said. "First Data is responsible for all of the authorization traffic. We're basically the program manager for that Google prepaid account."
First Data also provides PIN security, Zirkel added. "Gaining access to use that wallet on the phone requires a consumer to take an additional step and provide a PIN code to gain access to the accounts that are inside that handset," he said. "The antenna in the handset is not activated, so you can't make a connection with a contactless reader or use it to pay unless you've activated the phone and entered the PIN code into the wallet."
First Data is also working with Google to place closed-loop, merchant-specific gift cards in the wallet. According to Google's website, Google Wallet can store closed-loop gift cards issued by retailers that include Bloomingdale's Inc., The Container Store Inc., Peet's Coffee & Tea, RadioShack Corp. and Subway. As such, the wallet offers two levels of prepaid card functionality – the open-loop card and closed-loop gift card – depending on the level of merchant integration.
"The single tap would be coupon redemption and loyalty point accumulation," Zirkel said. "Let's say American Eagle wanted to give a 10 percent off coupon. And so a user of Google Wallet had downloaded that coupon to Google Wallet, they could go to American Eagle, use their $10 prepaid account balance, in addition to redeeming the 10 percent coupon provided by American Eagle. They'll get both experiences."
On the other hand, the 140,000 PayPass-enabled merchants may opt to accept tap-and-go payments without the added functionality of deeper gift card integration. Zirkel noted that customers can reload the virtual accounts in Google Wallet using credit or debit cards branded by MasterCard, Visa Inc., American Express Co., or Discover Financial Services and toggle back and forth between accounts, depending on payment preferences
While Zirkel believes plastic cards still have a long trajectory in the United States, he's convinced mobile payments represent the future. "The way that we hope the marketplace evolves is that any payment form factor that a consumer has, closed-loop prepaid, open-loop prepaid, credit cards, debit cards, all of those would be able to transition into Google Wallet," Zirkel said. "The consumer would have the same account selections as they do in the physical plastic world."
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