Tech Giant Throws Hat in the Payment Processing Ring With Google Wallet
The credit card processing industry is full of competition looking to gain market share in one of the most lucrative sectors of the financial arena. Merchant services organizations are constantly looking for the latest gimmick or technology in order to gain more merchants as well as customers. It was only a matter of time before one of the largest tech companies threw their hat in the ring.
In early 2011, Google announced a new partnership with Citibank in which they would work together to create the first digital credit card built into a smartphone. It will allow consumers to simply waive their Android-based cell phone in front of a receiver when making a purchase. Essentially, it would work the same as swiping a credit card.
The technology to make this work is not new; in fact, it is almost 10 years old. In the early 2000’s, credit card issuers began putting near-field communication (NFC) chips into certain cards, which allows a consumer to waive instead of swipe their credit card in front of specific payment terminals. For many, this new technology seemed a little silly since the art of waiving a credit card was very similar to swiping one. Regardless, that technology is the foundation for what Google is now calling Google Wallet (not to be confused with Google Checkout, a payment processing division of the tech company).
The NFC chips will be embedded into specific Google phones and connected to Citibank credit card accounts. When purchases are made, they will be billed to the corresponding account as if the physical credit card was used.
Since NFC technology has been around for a while, there are thousands of merchants already setup across the country to accept this form of payment. Most large grocery stores, gas stations and department stores have been using it for years, so the transition should be pretty easy for the early adopters.
Payment processing technology has been fairly consistent over the past 20 years, but the last 18 months has seen dramatic changes. Some of the other names in merchant services like ProPay and First Data have been pushing out new technologies as quickly as possible, while smaller startups like Square (from the Co-Founder of Twitter) have been driving innovation unseen before in the industry.
It is safe to say that the outlook for the payment processing industry is promising when companies like Google are getting involved. With so many dollars and such few regulations, it could be the last Wild West industry left in the finance sector.
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