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 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:
- Citi MasterCard credit cards
- 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.
How does it work?
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
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:
- Walk into a coffee shop that accepts payments with the Square reader (they’ll probably be using an iPad with the Square reader)
- 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
- Order a coffee
- Ask to pay with your Square Card Case tab
- They see your name in the Tab list, so they select it
- You grab your coffee and go
- The money is taken from your account (which is connected to your credit/debit card).
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.
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?