Merchant Link SecurityCents

A blog that comments on the latest developments in the world of payments, payment data security and technology, PCI compliance, and more.

When you think of digital wallets, names like PayPal, Google Wallet and Isis spring to mind. It’s been interesting watching these players position themselves to win the competition for both merchant and consumer mindshare. Each has taken a different approach, and each has had some highs and lows. Google Wallet yesterday announced a significant change to their product offering. Up until now, you were only able to take advantage of Google Wallet if you owned a Citi MasterCard. For the rest of us, no dice. As you may recall, prior to the wallet, Google had another product, known as Google Checkout. While Google Wallet holds your credit card on your phone, Google Checkout kept your card data in the cloud.

With the change, Google Wallet will now allow you to use any credit card; Visa, MasterCard, American Express or Discover. They are accomplishing this by storing your credit card in the cloud. When you store a card, a “virtual” MasterCard will be issued and stored on your phone. When a purchase is made from your phone, the charge will be against the virtual MasterCard. This insures that merchants still receive card present rates. In the background, Google will then charge the consumer’s card of choice. The weakness, of course, remains the need for NFC phones, of which only five are available in the US.

Another change is the addition of a new security feature that allows you to remotely disable your mobile wallet on a lost phone. You need web access to do this, but it’s a step in the right direction.

So, what does this mean for the world of payments? Google has come up with a rather unique way to gain acceptance of their wallet in their battle for consumer mindshare. And, they have done it in a way that will keep merchants happy too in that they will continue to enjoy card present rates. As every merchant knows, there is a significant difference between card present and card not present rates. Google appears to be subsidizing the gap in the interest of gaining penetration. From the consumer perspective, purchases will now show up on their statements with Google as the merchant of record. What impact this will have on chargebacks or return processing remains to be seen. One thing is certain however, in the battle for the mobile wallet, Google has just raised the bar, allowing almost any card to be placed in your wallet and used wherever MasterCard PayPass is accepted.

UPDATE (8.6.12):
Over the weekend, additional information was released indicating that Google was a bit pre-mature in their announcement. It appears that American Express has not yet reached an agreement with Google for processing cards via Google Wallet.  CNET released news on Friday of an email from the VP of Social Media Communications confirming that negotiations are still underway. It’ll be interesting to see how this develops…both parties expressed interest in coming to agreement. As I mentioned above, the two-card approach Google is taking could in effect mask the consumer’s actual purchase from the card brand, making purchases appear to come from Google. While it’s not confirmed that this is the approach Google is taking, no doubt American Express is concerned about Google getting between them and the American Express cardholder. We will continue to watch and comment as this story unfolds. Meanwhile, let us know your thoughts by posting a comment below.

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Written by Ed Learned

Ed Learned

Ed Learned brings more than 30 years of expertise in the payments industry in both product development and customer facing roles. Beginning with Melville Corporation he was instrumental in the early deployment of store VSAT technology. Subsequently he worked with Harmonic Systems, Alliance Data Systems, Xiotech, ISD Corporation, ACI Worldwide and is currently focused on core switching and emerging payments at Merchant Link.


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  1. Merchant Link SecurityCents :: Mobile Payments :: Digital Wallets: Beyond Mobile Payments on September 27, 2012 11:53 am

    [...] major players include PayPal, Google, ISIS and retailers themselves via MCX, but their solutions include very limited support at the [...]

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