Google Wallet could be the future, but the present is very limited

Consumer Reports News: September 30, 2011 05:38 PM

Google Wallet, an Android app that lets shoppers use their Sprint Nexus S 4G smart phone to pay for purchases at the cash register, offers a glimpse of a card-free future, but currently shows few advantages and some significant disadvantages over. the credit and debit cards that Google seeks to replace, my informal field test in San Francisco on Monday found.

Google promotes its Wallet as “the next big shift” in payment technology that’s supposed to eventually replace your credit, debit, and other plastic cards. So I took it on a short shopping trip to the tech-savvy town of San Francisco, where Google tested the app last summer, to see how well it works as a payment option.

Overall, Google Wallet delivered no significant added value, mainly because its merchant network is currently very limited, as is its support for existing card accounts. And because it currently works with just one phone and mobile carrier, most consumers won’t even be able to give Google Wallet a try.

Here are the details of what I found:

Limited acceptance. Google Wallet only works with MasterCard PayPass devices that can read the phone’s near-field communications (NFC) chip, which contains the payment account information. That’s only about 150,000 U.S. merchants right now, with more expected, but nowhere near the millions who accept Visa and MasterCard plastic.

Few card options. Google Wallet promises to replace other forms of payment, but it doesn’t actually work without another payment instrument. GW users must load the phone with account information about a Citi MasterCard credit card or a Google-branded prepaid card issued by MetaBank. More card options are in the works, including Visa, American Express and Discover. I chose the MetaBank card and also added funds to the card, which was fairly easy but added extra steps upfront..

Not easier to use than plastic. Where Google Wallet was accepted, I paid once with GW and once with a credit or debit card. GW functioned as advertised: You get your purchases rung up on the register, wake up and unlock the phone if it’s asleep, punch a security PIN into the GW app, and wave it near or tap it on the NFC chip reader. That’s more extra work than simply swiping a plastic card, but it’s tolerable and addresses some of the security issues that have been raised about NFC.

More paperwork.
You’d think a digital payment system would eliminate the need for paper receipts. Nope. Google advises you to keep the paper receipts for your records, because the digital record on the phone only records that a transaction occurred, when, and not necessarily accurately. Two of my San Francisco “tap events” were listed as occurring miles east on the other side of the Bay.

This moots the joke in a GW promo involving Seinfeld’s lovable loser George Costanza and his overstuffed wallet. Funny, but now George’s wallet will be stuffed with GW paperwork

Refunds work. When I returned items purchased at Radio Shack, GW performed as well as my plastic credit card. However, the clerk wanted my MetaBank prepaid card number, which I couldn’t find on the phone. Trying to figure this out ate up a couple of minutes, until I thought to tap the phone on the NFC reader, which consummated the return.

The GW refund showed up back on the phone the next day, as did the credit card refund in that account—however, GW returned the money about six hours sooner. Customer service reps at both my credit card issuer and GW said refunds usually show up within three business days, but can take as long as 14 to 30 days, depending on the merchant.

Rights disclosure online. When you load the GW app, you’re shown the terms and conditions agreement for the Google prepaid card, you’re asked if you accept it, and, if you read the lengthy legalese at all, you’re advised to keep a copy for your records. One problem: I found no way to keep a copy of the agreement on the phone. The workaround is to go online, where a copy of the terms is included as part of Google’s instructions for activating the prepaid card.

Extra offers are wanting.
GW promises to link users up with special deals, which are marketing discounts available through the separate Google Shopper app. I didn’t find anything I was interested in, the savings were hardly spectacular, and anyone can get the same deals without GW.

Bottom line: Google Wallet currently requires extra effort and extra attention without adding sufficient extra value. If Google wants the service to truly replace other forms of payment, the merchant network will need to be expanded significantly, additional payment options need to be rolled out, and, of course, the app needs to be available on more than just one phone.

Jeff Blyskal

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