Pay with your phone: Google Wallet and Square Card Case

Google and Square have just released two apps that allow you to pay for products without a credit/debit card or cash. In this post we’re going to explain how the apps work.

Google Wallet

Screenshot of the Google wallet home page with Nexus S phone showing Google wallet app

Google describes the Google Wallet app like this:

“Google Wallet is an Android app that makes your phone your wallet. It stores virtual versions of your existing plastic cards on your phone. Simply tap your phone to pay and redeem offers using near field communication, or NFC.”

Right now, Google Wallet supports two payment methods:

  1. Citi MasterCard credit cards
  2. Google Pre-Pay cards

Eventually, we believe Google carries enough clout that they will be able to do deals with all major credit and debit cards to bring them on to the service. If you sign up for a Google Pre-Pay card, they give you $10 for free to start.

At launch, Google Wallet will be compatible with Nexus S 4G by Google, available on Sprint and will only be available in the USA. Check for local stores that accept Google Wallet here.

How does it work?

How it works: Look for the PayPass symbol when paying and then tap your phone on the reader

Is it secure?

From Google’s site

Google Wallet requires you to set up a Google Wallet PIN that must be entered before making a purchase. This PIN prevents unauthorized access and payments via Google Wallet. Android phones also feature a separate lock screen.

Google Wallet and MasterCard PayPass™ provide many layers of security. Google Wallet stores your encrypted payment card credentials on a computer chip on your phone called the Secure Element. Think of the Secure Element as a separate computer, capable of running programs and storing data. The Secure Element is separate from your Android phone’s memory. The chip is designed to only allow trusted programs on the Secure Element itself to access the payment credentials stored therein. The secure encryption technology of MasterCard PayPass protects your payment card credentials as they are transferred from the phone to the contactless reader.

Essentially Google is saying you have to enter a pin to pay and that the card details are stored on a physically separate chip on the phone. This means Google Wallet is basically as secure as your physical pin-protected credit/debit card. There will obviously be a great deal of effort by hackers to figure out how to abuse this system.

Square Card Reader

An iPhone with the Square Card Case app installed. Looks like a wallet with cards in it.

Square is now processing over $3,000,000 per day with their free credit card reader – a pocket-sized credit card reader that plugs into your phone’s audio jack.

On the back of this success, they’ve launched a virtual wallet app for Android and iOS called the Square Card Case.

How does it work?

Instead of using NFC like Google Wallet, it uses the idea of a ‘Tab’. Here’s how it works, using buying a coffee as an example:

  1. Walk into a coffee shop that accepts payments with the Square reader (they’ll probably be using an iPad with the Square reader)
  2. Open the Card Case app and click ‘Use tab’. This connects you to the store’s Square app and creates an ‘account’with the store
  3. Order a coffee
  4. Ask to pay with your Square Card Case tab
  5. They see your name in the Tab list, so they select it
  6. You grab your coffee and go
  7. The money is taken from your account (which is connected to your credit/debit card).

This video shows a working example.

Is it secure?

It’s hard to tell as Square isn’t revealing anything about how the technology works.

Where can you use it?

Card Case currently works in stores in SF Bay Area, New York, Los Angeles, Washington DC and St. Louis.

Our verdict

We’re clearly early days in the cashless society. However, Google and Square have begun the process and we believe it will catch on and eventually evolve the way humans pay for items.

The primary hurdles are security and user adoption. Square’s Card Case is a little confusing and the Google Wallet requires you to have an Android device with NFC.

What do you think? Will we always use credit/debit cards and cash, or is this the beginning of a new age?

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Comments

7 comments on “Pay with your phone: Google Wallet and Square Card Case

  1. It’s interesting, at one point I’m sure somebody probably touted credit and debit cards as the replacement for cash, yet here we are still handing over notes and coins for payment. I think rather than replace cash there is a chance these payment methods could replace the traditional bank card but I’m not sure it would ever completely get rid of money, at least not in a short to mid term time frame, maybe far away in the sci fi future though.

  2. I run a series of craft/vintage markets locally and I can not wait for Square to launch in the UK. It would transform the kind of goods we are able to sell and the quantity that we are likely to sell.

    We lose a lot of business from people not having enough cash and not returning or people only buying what they have enough cash. Having a simple solution to taking cards would be massive.

  3. Really interesting but I don’t like the idea of all these vendor specific apps. It will get really confusing for consumers and sadly another thing for Apple and Google to fall out over. I wish they would make up, they are the Dream Team!

  4. The Japanese have been doing this for some time now. I’m surprised it has taken this long. I get the feeling Apple is going to come out with it built into the iPhone 5. 

    Another limiting factor is you need either a pre-paid card or one specific credit card. That make the list of early adopters pretty small.

  5. I’m a little worried about Google collecting revenue information. If they are allowed to match these pieces of information to online usage information customers would be absolutely transparent. One the other hand, it offers great marketing opportunities for retailers. Once you are connected to their store they could regard this connection as opt-in to send you special offers. Maybe, Google grants them access to their information about your online usage which would allow them to target their customers in a incredible detailed way. Hence, I’m really curious about the development of mobile payment.

  6. Is this going to be a new revolution in the financing activity. Every thing can be operated from mobile virtually makes less carriage