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Surviving on mobile wallets, Part 1: Google Wallet

Fred Williams

Paying for purchases with your smartphone has so far been one of those elusive promises like the jetpack. You know, we were all supposed to be zooming around with personal flying machines strapped to our backs by now, according to predictions decades ago. Similarly, the payments industry has been trying for years to get mobile wallets off the ground.

Google Wallet has been hawking itself to consumers for three years, mostly unsuccessfully, but the arrival of Apple Pay in October injected new energy into the field. Apple included some privacy and security features that other m-wallets don’t have. And if anyone can get consumers to buy into a new technology on a mass scale, it’s Apple.


Surviving on mobile wallets -- Part 1, Google Wallet With that in mind, CreditCards.com’s Fred O. Williams and Yasmin Ghahremani decided to take the two main mobile wallets for a test run. For one week, they roamed CreditCards.com’s home city of Austin, Texas, seeking to use only their phones for payments. Williams used Google Wallet on a Motorola MotoX phone running Android 4.4.4. Ghahremani relied on Apple Pay on an iPhone 6 running iOS 8.1. It would be an Apple versus Google showdown.


They realized it would be a challenge. Apple Pay and Google Wallet both work using Near Field Communication (NFC), the technology that allows you to buy things by tapping or waving an NFC-enabled card or phone near a compatible point-of-sale machine.


Problem is, the vast majority of U.S. merchants lack such machines. Apple says there are 220,000 NFC merchants nationwide that should accept Apple Pay, including several dozen merchants listed as official partners; Google claims 300,000 through the MasterCard PayPass network. Both represent a tiny fraction of the 3.8 million retail establishments in the U.S.


Acceptance of NFC payments is expected to grow. For now, though, Williams and Ghahremani would have to hunt. We sent them off to report on their experiences, and while their bellies were never empty, their gas tanks were a different story. Williams details his adventures below; see “Surviving on mobile wallets, Part 2: Apple Pay” for Ghahremani’s adventure. 

Wednesday, Day 1
6:40 p.m. My Android phone trills the instant it touches the tap-and-pay pad.  It’s not an incoming text or phone call. The tone confirms that a credit card payment is zipping through the phone, without benefit of plastic.

This afternoon I loaded my Visa card into the phone’s Google Wallet app by snapping its picture. Now the card has scored a dinner of supermarket sushi and an Austin Amber beer for $13.83 at Whole Foods, while it remained in my wallet. Short-range radio waves known as “Near Field Communication” (NFC) did the talking between the phone and the store’s card reader.

It’s my first experience with NFC, but not the clerk’s. She points at the “OK” button on the pad’s touch screen that still needs to be pressed. “I’m waiting for it to get so you don’t even have to do that,” she says, seemingly unconcerned about her dwindling workload.

Eating my sushi with a cash-paying friend, I text my colleague-slash-opponent, crowing about my success. “You know, volume isn’t everything,” she responds. “I got fingerprint verification and minimal data collection.”

“Can’t eat privacy, Apple girl,” I text back.  It is on.

Thursday, Day 2
12:31 p.m.  Uh-oh. “Tender not accepted,” the register at Walgreens says, throwing a curve into my lunchtime errands. The phone buzzed, the card reader blinked, but no dice.  I had switched the app from my credit card to a debit card (loaded earlier) while waiting in line. The debit card usually lets you get $20 cash-back here — but that’s what sank the NFC deal. “Cash-back transactions are not supported at this time,” the app states unsympathetically.

12:32 p.m.  To the sighing person in line behind me: It took a whole minute to drop the cash-back from the transaction and pay $14.12 for my shampoo and store-brand sucralose. Thhhhbbbbtttt.

12:45 p.m. The phone buzzes up three mini-tacos and a Coke for $6.69 at Taco Cabana.  Hardly faster than swiping a card, but it’s convenient, since I’m already fiddling with the phone while in line. There’s no need to enter the app’s PIN, because the timeout is set at one day. Too long? The two other choices are “15 minutes” and “never.”

The simplicity of using tap-and-pay belies the complex handoff that Google Wallet makes behind the scenes. What actually paid for my tacos was a virtual card from something called Bancorp Bank, according to the app’s terms of service. Embedded within the app, the virtual prepaid debit MasterCard pays the merchant, then gets reimbursed from my credit or debit card. The handoff allows Google Wallet to work at the 300,000-plus locations that accept MasterCard PayPass technology.

Friday, Day 3
2:45 p.m.
The emergency room at Seton Hospital Northwest doesn’t have card logos splashed across the counter, but I know they take credit. They brought a card reader to my treatment room when I was here last year with a dislocated finger. I drove here one-handed after falling during a run — but first I hobbled two miles back home to get my wallet.

No, the nurse at the registration desk says, answering my question, they don’t have tap-and-pay, yet.

If my phone was my wallet, I could have summoned a cab or Uber when I fell — where I fell — and come straight to the ER. That is the promise of mobile wallets, to leave the wad of plastic cards at home. You can put auto insurance cards in your phone, and now credit cards. Why not health insurance? Driver’s license? Why must we carry two deck-of-cards-sized objects around?

No pain meds without photo ID, the nurse says.

OK, that’s a deal-breaker. But there’s still hope — she adds that snapshots of my driver’s license and health insurance card on my phone should work. Next injury, I’ll try it.

3 p.m. “Please have your payment ready,” the sign in McDonalds’ drive-thru lane urges. Here, for a guy, tap-and-pay is way more convenient than the alternative: Unfasten your seat belt, extract your wallet from your back pocket and fumble with cards or bills. The phone’s already sitting in the console. The clerk has to hoist her card reader out the little window for me to tap, but she’s cheerful about it. A moment later my chicken snack-wrap plops into the passenger seat and $3.02 lands on my Visa bill.

Breakthrough. An app called “MasterCard nearby” maps places that take contactless payments. My Apple-centric opponent told me about it. But the places that take Apple Pay also take Google Wallet. We might be working on the same blog.

“If accessibility isn’t much different, I’d say (Apple Pay) wins hands (or thumbprints) down,” she texts.

“I will get ads targeted to my buying habits that you will be deprived of,” I snark back, referring to Google’s policy of storing my shopping data, something Apple Pay says it doesn’t do.

But on closer inspection, Google’s privacy policy says nothing about sharing my shopping habits outside the company, unless it is in the aid of a transaction I requested. Google hasn’t publicly sworn off ever doing so, as Apple famously did, but the current policy doesn’t allow sharing.

The app lists transactions for users’ convenience, and the log is backed up within Google “so the user can still access the transaction data in case they get a new device,” company communications manager Anaik Weid writes in an email answer to my question. Nothing about sharing.


Saturday, Day 4
11:30 a.m.
The farmers market in downtown Austin is a good place not to rely on a mobile wallet. In fact, anything but cash is dicey. But later I do manage to buy lunch for two wirelessly at Whataburger, a regional fast-food chain that is up to speed on mobile payments.

Although the transaction is carried over radio waves, it should actually be more secure than swiping my plastic the old fashioned way. The number sent to the card reader isn’t my account number, but a one-time authorization code. Google says my actual card numbers stay encrypted on secure servers. The wallet app won’t work unless the screen is unlocked and the app’s four-digit PIN is entered. And if fraudsters still somehow misuse my Google Wallet, the company’s fraud protection policy covers all unauthorized transactions that are reported within 120 days.

Sunday, Day 5
No NFC purchases today. Living off stocked-up food in the pantry and the gas in my tank, knowing it can’t last much longer. Tick, tick, tick.


Monday, Day 6
The pool hall that hosts my Monday night league is a great candidate for mobile wallets. Currently the waitress makes three long trips to settle your bill — one to bring the check, a second to take your card to the register and a third to bring back the slip. Tapping the phone once on the way out would be a big improvement. Alas, NFC payments remain in the future for Slick Willie’s Family Pool.


Tuesday, Day 7
12:10 p.m.
Pain at the pump. Valero stations supposedly take NFC, and the tap-and-pay pad on the pump blinked, but no gas. The clerk said the system was set up for Isis — referring to the former name of Verizon’s mobile payment system. It now goes by the less terrorist-conjuring name Softcard.

I also have the Softcard app on the phone, but it takes some effort to switch mobile wallets. In order to work easily, Google Wallet is the default mobile wallet on the phone. Choosing a different wallet means changing the phone settings. It’s quicker and easier to pull out the plastic.

12:35 p.m. Back at Walgreens to see if my American Express card works on the wallet app. I switch Google Wallet to that card, having previously entered it in the app by scanning its front and tapping a few keys. AmEx goes through without incident. Switching cards within the app is a breeze.

Hold the phone. “You may not earn certain reward points and benefits for purchases through your card issuer’s credit or debit card rewards program (such as overall spending and purchase protection or insurance),” warns the Google Wallet FAQ. This is because of the handoff within the app that uses a virtual MasterCard to pay for transactions.

So I go online to check my credit card transaction history — where all is normal. The activity section lists merchants where I bought things and the correct product code description, which is important for rewards programs to work. “GoogNFC” is appended to the merchant’s name, but reward points were added to my account for each transaction. Whew.


Wednesday, Day 8
No alarms go off when I enter the Apple Store carrying an Android phone. In fact, the opponent’s home turf smiles warmly on Google Wallet. I buy an iPhone battery case, explaining to the bushy-faced clerk that it is for a friend. He chats amiably and doesn’t raise an eyebrow at my Droid, which I wave over his phone to complete the purchase.
Apple Pay missed out on that transaction, but Apple Inc. got $79 for the battery case. No wonder Apple’s retail arm cheerfully accepts the rival wallet.

Maybe there’s a lesson in this for stores that are blocking NFC transactions. It made headlines in October when CVS and Rite Aid shut off their NFC terminals in favor of a rival, retailer-backed mobile wallet that’s still in development. The retailers’ wallet, called CurrentC, is designed to save stores fees on card transactions that Visa and MasterCard charge. But if turning away Google Wallet, Apple Pay or other NFC payment choices means turning away sales, the lost business will easily outweigh the savings in swipe fees. My money is on whatever is most convenient for shoppers.

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