Google Wallet: Doomed?

One of the biggest new features of both Android 4.0 “Ice Cream Sandwich” and the Galaxy Nexus was improved support for Near Field Communication (NFC). One of the most touted applications for NFC technology was Google Wallet, a project to replace your debit card with your phone. Leveraging the NFC hardware in the phone and Android’s built-in authentication methods (such as facial recognition unlocking, new in ICS), Google Wallet was supposed to be a more secure way to pay at supported retailers.

But the last few weeks have seen some very nasty press for Wallet, and a few reports have even started to ask if it’s already destined to fail. Between competition from carrier-supported NFC payment options and a rash of recent security exploits, things certainly aren’t looking good. Are the complaints against Wallet justified, or a overreaction? Is Wallet doomed, or just experiencing the natural growing pains of such an evolutionary technology?

Limited Audience

One of the biggest problems with Wallet is the very limited group of people who have access to it. Wallet requires your phone contain an NFC chip, which only a handful of devices currently on the market include. At the time of this writing, only a single device is fully supported by Wallet, the Nexus S. While the Galaxy Nexus includes NFC hardware, it only works on GSM versions of the phone which have to be imported into the US. The American version of the Galaxy Nexus, using CDMA technology and available exclusively (for the time being) from Verizon Wireless, can only run Wallet if the application is side-loaded.

When it was originally announced, Wallet was supposed to include support for stickers which could be used to retrofit existing phones with NFC capabilities. Google said devices relying on the stickers rather than integrated NFC chipsets would have a “limited” experience, but that they would still be supported by the service. But here we are, some 8 months after the service officially went live, and nothing has been heard of the retrofit stickers. Are they ever coming? If they do, will the limitations they pose on Wallet’s functionality make them unattractive to potential Wallet users?

Carrier Competition

If Google is serious about Wallet, they’ll need to get more devices on board, and fast. A new competitor for Wallet is gearing up in the form of ISIS, a NFC payment system created through a partnership between Verizon Wireless, AT&T, and T-Mobile. Many speculate the reason that the Verizon Wireless version of the Galaxy Nexus isn’t officially supported via Google Wallet is due to Verizon’s position as a founding member of ISIS. Its not unreasonable to conclude that carriers which have joined the ISIS network would be unwilling to allow their branded devices to function on a competitor’s NFC payment system.

With Google abandoning it’s attempts to sell unlocked mobile devices directly to the consumer after the less than stellar performance of the Nexus One, carrier limitations on Android phones could be a serious roadblock to Wallet. If carriers refuse to ship their Android devices with Wallet or disallow it’s installation through a market filter, Google may have no choice but to distribute the Wallet APK outside of the Market itself. This is not without precedent, as Amazon has been using this method to distribute their Appstore for Android. Users who wish to install the Appstore must first enable “Unknown Applications” under the Android settings, and then download the APK manually either via text message or QR code.

Conceivably, Google could use QR codes at retailers to install the Wallet package on devices, but there would still be the issue of NFC support. It’s already a stretch to expect the average consumer to enable “Unknown Applications” and scan a QR code to install Wallet, but then to also expect them to know if their device supports NFC is unrealistic.

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