July 18, 2011 • 37 mins
Google Wallet wants to turn your smartphone into a payment system. So how can you pay for things using your cell phone? Is Google Wallet a threat to other services? Join Chris and Jonathan as they explain how Google Wallet works.
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Episode Transcript
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Speaker 1 (00:00):
Brought to you by the reinvented two thousand twelve Camray.
It's ready. Are you get in touch with technology? With
tech Stuff from how stuff works dot com. Hello again, everyone,
Welcome to tech stuff. My name is Chris Poulette and
(00:20):
I'm an editor at how stuff works dot com. Sitting
across from me, as always senior writer Jonathan Strickland. It
ain't fair how we scrounged for three or four bucks
while she gets warbucks. The little brat as always excellent.
Thank you. So we're gonna talk about Google Wallet today, indeed,
(00:41):
and Google Wallet was a project that was announced back
in I think May of eleven. It is now late
June twenty eleven when we're recording this podcast, but we
wanted to kind of talk about it and kind of
go over what the implications of the the product is.
Our gosh, I'm so tired. I've just got back from
(01:01):
vacation and my my ability to speak in coherent sentences
with proper grammar is sorely depleted. Yes, yes, so Google
wallet fire bad. Um. Anyway, so we wanted to talk
about what Google walle it is, how it works in
a kind of bird's eye view level and what it
(01:21):
might mean to the future of making purchases. Yeah, it's
funny because this is not really a new topic at all,
but it's new to many people here in the United
States because I mean, this is the kind of thing
that's been going on for many years over in Asia. Yeah,
Japan in particular, Japan in particular. Um, basically the idea
of being that you could uh store payment information in
(01:45):
your cell phone or smartphone and uh use that information
to make a payment when you go to a store. Yes,
so instead of scanning a you know, swiping your credit
card and signing a little digital thing, or or having
to put in your pin number if you're using a
debit card, or even using a credit card that has
(02:06):
an r F I D chip in it where you
know you'll you'll see those consoles at certain vendors where
you can tap the card and that registers as a payment. Uh,
instead of using a card at all, it would be
stored on your phone. And you might ask, well, why
would you even bother to do that, Like, why why
have it on your phone? As opposed to if you
if it's replacing tapping a card, how does that make
(02:29):
it easier? If you put it on a phone, and
that's a that's a legitimate question. I mean, one answer
you could arguably give is that, well, you cut down
on the things you need to carry. But when you're
talking about a credit card, it's not like that's a huge,
bulky thing that's really weighing it down. In fact, it's
much smaller form factor than a cell phone or smartphone.
So really the value in the proposition is that Google
(02:53):
has has grouped this ability to pay through a a
smartphone own with other services that kind of make it
more of an attractive service. It's not it's not just
that you can pay with a smartphone. There are other
features that are involved that are pretty cool. Yeah. And
in addition to that, Google says that it doesn't intend
(03:16):
to replace a credit card. It intends to replace all
of your credit cards and your loyalty cards. Does the
cards that you carry around with you to UM. You know,
if you you're at your grocery store and you get,
you know, fifty cents off a can of tomatoes if
you have the card, UM, basically you're selling them your
information so they can market to you. But you also
(03:38):
exchange they'll give you a discount, and you also get yeah,
so not just loyalty cards, but also coupons, like electronic coupons.
So so there might be a loyalty program. For example,
here's an easy one. My wife really likes coffee, right,
so she has loyalty cards with practically every coffee shop
that is in a ten mile radius of our home. Yeah.
(04:03):
Her loyalty to coffee as legendary, Yes, to the point
where you know, she has to sort through her loyalty
cards when she goes into a coffee shop to determine
which one of her cards applies at that shop. And
so you know, it's one of those things where you know,
you buy nine coffees and the tenth one is free,
same sort of thing, except it stored electronically on your phone,
and so it the the application of Google Wallet keeps
(04:24):
track of how many times you've been to this particular
place and bought a particular thing, and then automatically registers
when you hit ten, and so when you go to
pay it registered, it files that information for you. It's
the same as if your card had been stamped a
tenth time, and then you don't have to uh and
want you don't get the price of the coffee deducted
(04:46):
from your account or charged to your card. Um. And
before we get too far into this, just before we
launch into it, I wanted to mention UH that we
do have an article about paying UH with a cell phone.
In fact, it's called can you use a cell Phone
as a credit Card? And Julia Layton wrote that article
and it's a UM. If you go and read the article,
(05:07):
you'll actually notice that there's some mention of of this
debuting in the United States back in two thousand seven,
and not Google Wallet, but the ability to pay using
using a phone as a credit card. Now, keep in mind,
even two thousand seven is late to the game compared
to Japan. That's that's true. That's true. UM. I just
wanted to go before we go any further to UM.
(05:29):
Google is also saying that in addition to loyalty cards
and credit cards, Google says that it that Google Wallet
will eventually allow you to use gift cards, receipts, boarding passes,
UM and and possibly your keys UM available through Google Wallet.
So UM it would in fact, in theory be able
(05:51):
to reduce the amount of stuff you would need to
carry in your wallet. Now, I noticed there's no driver's
license mentioned in their passport. That would be interesting to see.
Although passports in the United States do have a radio
frequency identification chip, Yes they do. So I have a
little little wallet that blocks that. Yes, mine. We'll talk
about that later too, because that's gonna come up. But
(06:14):
we should probably talk about the you know, how it
works and the benefits of using it. Sure now, when
they were when Google was launching this, they were talking
about two specific other partners with this. Yes, there are
also thousands of vendors that are going to support this,
but the two partners specifically that I wanted to talk
(06:36):
about where Sprint because the phone that they're debuting the
Google Wallet service on is the Nexus S four G,
which is only on Sprint, Yes, all right. And then
City MasterCard, which is that you know, that's where that's
got the financial backing. That's so if you want to
have Google Wallet, you have really two choices as far
(06:58):
as what kind of payment option you go with. You
can either apply to get a City MasterCard account, or
if you already have one, you can enter that information
into Google Wallet and that will become your Google Wallet account.
Or you can get a Google Prepaid card and Google
Prepaid Card is you know, it's essentially what sounds like,
(07:21):
you can you can put money into your Google Prepaid
card and use that for payments, kind of like you know,
like pay Pal or any other sort of gift card
kind of approach. Um, And what's kind of interesting is
that if you do the Google prepay approach, they will
actually credit you ten dollars in your account, so you'll
get ten bucks for free. Yeah, I thought that was
(07:44):
pretty funny. Actually, and at least until um the end
of twenty eleven, you will not have to pay any
fees to add money to your Google Prepaid card. So,
in other words, it's not like you get a service
feed up added on top of you know, you want
to add say a hundred dollars to your Google Prepaid card,
(08:04):
You're not going to get a service fee of five
bucks on top of that, at least until the end
of twenty eleven. Now, uh, what does that mean that
in they'll start adding in a service fee. Maybe we
don't know. But the wording is specifically about till the
end of or at least until the end of twenty eleven,
is how they put it. So, um, yeah, you've got
(08:25):
so you've got the that's the backing as far as
payment goes, so it's either City MasterCard or the prepaid card,
which you can use any credit card to purchase money
to go toward the prepaid card. You don't have to
have a City master Card for that one. Uh. Well,
what about the actual payment process, like, how does this
(08:48):
transfer happen? Well, it happens through UM something called an
NFC chip. Yes, that's near field communication. UM. This is
a little different from the r F I D chip
that you find in your UH and some of your
credit cards, which is if you if you have one,
you'll know it. It's that that little uh usually gold
(09:09):
color or silver colored UM piece of metal embedded in
the chip. Basically that has your your information UH in
it so that when you UH take it near one
of those paid UH pads and you touch it to
that the pad can read that of course. UM. You know,
basically it's as far as you know, it's not electronic
(09:32):
or anything like that. It doesn't have you know, need
a battery or anything to operate. UM. So it's it,
but it's essentially always on. There's nothing keeping it from
being read at any time, which is one of the
criticisms people have of R f i D chips, and
as Jonathan was saying, he's got apparently he carries a
Faraday cage in his wallet. It's a it's it's a
(09:55):
special case that has r f i D blocking material,
or not r f i D blocking material, but blocks
radio frequencies. Right, So if somebody had something that could
if he weren't carrying that, and somebody had something that
could pick up an r f i D chip near enough,
and they just you know, bumped into him in public,
(10:16):
say like a pickpocket might, except without having to pick
his pocket, they could read the number off of the card. Um.
I also find that having r f i D chips,
multiple r f i D chips in my wallet will
interfere with things like the UH rapid transit system in Atlanta.
If you have another r f i D chip, it
(10:37):
will you know, they'll the two signals will cancel each
other out and say I can't read that the wallet. Um,
that's annoying. It's so irritating having to go all the
way to taking a card out of your wallet to
tap against the little circle so that you can go
in and ride public transportation. Such an inconvenience, But in goodness,
we got rid of that token system. But in contrast, UM,
(11:00):
the near field communication system can be turned on and off,
and there is a transceiver built into UH the NFC
enabled phones in this case the nexus S that will
allow you to transmit that information, so it can be
you can turn it off essentially. UM, now you can
have and you can have a passive NFC system where
(11:21):
where one element is just like with r F I D,
where one element is is active and then the other
one is passive. But in the case of smartphones we're
talking about and both both parts are active. And then
you say, all right, well enough about this, how does
it actually work? All right? Well, uses inductive coupling. Really, yeah,
so we're talking inducing electricity. And if you guys have
(11:43):
been listening to tech stuff for a while, you know
we've talked about this in multiple episodes and including some
of our Basic Electronics episodes and others. So induction, we're
talking about that wonderful relationship between electric electricity and magnetic fields.
So electric fields and the magnetic fields, and so what's
happening with U NFC is that it's you have at
(12:07):
least one element that's producing magnetic field and then you
have another element that has a coil of wire in it.
And when you pass that that chip that has the
coil of wire in it next or through that magnetic field,
it alters the magnetic field, all right, and it alters
it in such a way depending upon the coil of
wire that's in that chip and other elements. It manipulates
(12:30):
that magnetic field in such a way that something that
electricity flows through that active element and then whatever is
supposed to happen theoretically happens. So yeah, exactly. So example,
for example, if it's a locked door and it has
an electric lock that is producing this, it's using near
field communication. UM. You have the little pad on the
(12:51):
door that is actively generating this magnetic field. You pass
your key fob through that magnetic field. It registers that
as the correct uh kind of alteration of that mannetic
field that corresponds to this person has a key to
this office and it will unlock. Now with the smartphones,
you've got the two different magnetic fields that are being generated,
(13:13):
and that's where you can have this communication passed between
the two where essentially you have one asking for identification
and the other one UM making sure that registers that
it's an actual payment. You know, you have to have
this work on both sides for this to to take place.
So um and just in case you're curious, the data
rates that can transfer between two devices in an NFC system, Uh,
(13:39):
there are three different data rates that are possible. And
when you hear how what the speeds are, you gonna think, wow,
that's pretty slow compared to like an Internet connection, like
a broadband Internet connection a hundred six killabits per second,
two twelve kilabits per second, and four four killa bits
per second. But you gotta keep in mind that the
amount of information that's being transferred here minuscule. Yes, you know,
(14:01):
you're talking about some sort of identification, credit card information, um,
and that's it really and well, purchase price or whatever.
But it's tiny in comparison to the amount of data
you get even just loading up a basic web page.
So you don't really need a super fast data transfer
rate in order for this to work. So the smartphones
(14:24):
are using this NFC technology, and the the vendors have
to use it as well. I mean, obviously, even if
you've got Google Wallet and you walk into a store,
there's no guarantee you can use your phone to pay
for whatever you're buying, the vendor has to also have
their half of the system in place, right, So yeah,
you can't just walk up to a cashier and wave
your phone around and it will pay for it. You
(14:44):
might get some funny looks or be politely asked to leave,
or maybe not politely asked to leave. Well, um it does.
If you've seen the MasterCard pay pass system, UM, then
there there are actually play says. There's a on the
Google Wallet UM information site. There is a way to
(15:06):
look up whether or not they're Google Wallet merchants in
your area. And basically any place that has that system
already in place, that system will interact with Google Wallet
or is this it's supposed to? Um? Plus, there are
other places to a lot of the stores that you
might find the malls here UM in the United States,
and some restaurants UM. You know, places like blooming Gale's
(15:29):
or American Eagle, Macy's, um Arby's. Yeah, that's true because
I actually went. Uh. If you go to to Google's
pages on this, they have a little section where you
can type in your zip code and see what what
stores nearby are. UM have that that option and so
I checked for our office just out of curiosity and
(15:51):
saw that there was an Arby's. And uh, it's interesting
because we actually have a couple of really large malls
near our office, and I didn't see a lot of
stores in those malls that had adopted us. Now. Granted,
even though this technology, again the technology itself is not new,
the product and the service are very new. Uh so
(16:11):
it's not a huge surprise that there's not a widespread
adoption yet. But what is interesting to me his Eric
Schmidt has said that he believes within a year there
will be widespread adoption. So, based upon the recording of
this podcast within by June two thousand and twelve, Schmidt
expects that this NFC approach to paying for goods and
(16:34):
services will be widespread. I'm holding him to that. It
would be nice. I mean, especially again we'll get back
to the offers and everything with Google Wallet to talk
about how you know that adds value to their their service. Um,
but uh, I mean it would be nice to know
(16:54):
that we are no longer kind of in the the
relatively dark agents technologically speaking, compared to like Japan. I
know I keep bringing that up, but I mean Japan
is light years ahead of us as far as the
mobile technology goes, you know, I mean they're we're catching
up definitely. And I know that the iPhone is has
become popular in Japan as well, So it's not like, uh,
(17:18):
you know they look at our our brand new toys
and say, man, that was cool five years ago. Well, um, well,
that's something I want to talk about in a minute.
There I wanted to bring up before we got away
from too far away from how it works. I feel
compelled to point out that there is another step. You
don't just tap your phone to the pad and you know,
(17:41):
say thank you very much, here's your receipt. There is
another step. Now you you might be wondering, uh, you know,
how does it know it's me? You have to enter
a pin on your phone. Your phone has to be
on if it if it is off, if you've run
out of battery, you've run out of cash or not cash.
But you know, um yeah, you can't usually can't use
it anymore because it's got to be able to receive
(18:04):
a signal. Now you don't have to have a a
phone signal where you are. So you're in a really
giant mall um away from a tower, and you're way
from a tower and you can't get a signal. Why,
I can't imagine the mall that wouldn't have its self.
But there's there are places. There are places near where
I live that are right around the corner where I live,
and there are certain stores that if you go into it,
(18:27):
it's like they've built a fair day cage around that
store because you can't your signal drops like a like
like a like a stone, like like something that drops
very like something that it hung in the air, the
same way bricks. Don't I love that? Um? But yeah,
you have to you have to be able to identify yourself.
The phone has to be on for you to complete
the transaction. UM. As a matter of fact, the uh,
(18:50):
the information is stored in something that Google is calling
the Secure Elements. Yes, it's not. It's not connected directly
to the Android processing chip. That was a very important
part of Google's presentation. They wanted to make sure that
everyone understood the what measures they had taken to ensure
security of this, because you know you could you could
clearly any time you're talking about transmitting data wirelessly. There's
(19:14):
this whole fear that there's a way that that data
could get leaked and compromised. And of course we all
know that you don't have to transmit data wirelessly in
order for your information to be compromised. I know this
from recent personal experience. But um, but any time that
you see that that medium of exchange, that's one of
(19:38):
the concerns you have, right. So, yeah, the secure element
is is completely separate from the Android processor and the
apps that Google walad app does not directly um access
the secure element. So, in other words, they wanted to
make sure that if you were to, say, lose your phone,
(19:59):
that getting hold of your credit card information would not
be an easy thing to do. Now, that's not to
say that some enterprising hacker couldn't figure out a way
to do it. So even if you were to lose
your phone, the Google stresses that you should immediately contact
your your bank or other financial institution, or to change
your credit cards, canceled them out and get new ones,
(20:21):
because you know, you never want to just entrust and
say that something is completely secure from all possible attacks.
Because we all learned a lesson from Titanic, well, Uly
Leonardo DiCaprio is dreamy well, and in the case of
the uh nexus s the secure element is an n
(20:43):
x p p N six K chip. I'll sure give
it away now everyone knows. According to Clinton Bolton from
E Week, UM and yeah, lest you think, as I
saw in comments on his article, UM, that we are
necessary early spreading fear, uncertainly, uncertainty and doubt, all otherwise
(21:05):
known as fud UM. I just I feel compelled to
report um as other people did. I saw this person
quoted a couple of times UM McAfee security expert UM
Jimmy Shaw, who basically was saying that based on what
he knows the system, it's not that the system isn't
(21:26):
designed with security in place, he you know, so much
as he thinks that it might be possible to take
the authentication key from the Google Wallet application itself and
uh rite an application that will allow somebody to fool
the secure element into giving up what it has. It's
(21:47):
not the secure element that he sees as the weak
link the app as being reverse engineer able to get
at whatever the you know your PIN number and just
it yes, sorry, you know pin? Actually the end of
the personal number, the personal identification number number, UH your
(22:09):
Windows phone. Now we're talking to Android I'm sorry. Yes, yeah,
they basically they feel that it's possible to do that. Now, um, yes,
you could say that Google has gone to a lot
of trouble to ensure that it's not going to be
easy to make this happen. Um and and and people
uh who like this idea are probably saying no, you're
(22:34):
just saying this, and it's it's very unlikely. Yes, it's unlikely,
but it's possible. It's a good idea to keep that
in mind. Just like any bank, it's possible that it
could get robbed. It's likely, but it's possible, and it's
possible you could have your card skimmed when you go
to a machine or that it is very possible, and
(22:56):
you know that there might be a very tiny camera
recording your movements that you so anyway the but but
also we should keep in mind that Android phones have
um have optional or locking systems on them as well.
So that's as a second level of security, which is
separate from the Google wallet. Like that's just so that
(23:18):
you can use your phone. So for example, if you
were to pick up my phone, you would find out
that there is a security code that you would need
to enter in order to access my phone. Now, yes,
there are ways of getting around that if you know
how to hack the phone properly. But again it's that
level of security that discourages you know, a major percentage
(23:38):
of the people who would otherwise try and take advantage
of finding your phone. So you know, no security system
is gonna be perfect, but you try and make it
strong enough so that the cases are our failures. And
then again, as I said before, Google does stress that
you have to let your financial institutions know so that
(23:58):
you can you can make sure that no one can
use that card against you. Um. And also they have
an element in place where it prevents you from creating
a week password or a weak pen. Yeah, so if
you were to try doing one one one one as
your pen so that you wouldn't have to remember it
whenever you're using Google Wallet, it will reject that and
make you choose something that's not going to be the
(24:20):
same digit four times or four sequential digits either up
or down. That kind of thing. Tony Bradley is sorry,
Tony Tony Bradley of PC World, Um, it sounds like
you may have read the same article because it's um
this one also quoted Jimmy Shaw, uh but um he
(24:40):
had Bradley spoken with Google specifically about some of these things,
and Google said that Google Wallet itself does not have
access to the credit card information uh in the secure element.
Um so you know, basically they you know, they're they're
stressing that it really is a secure way of doing this.
(25:00):
Plus the uh uh. They added that the transceiver is
off if your your phone screen is off. So as
long as your screen is off, it is not there's
no way that it's supposed to be able to transmit information.
And near field communication works over very short distances. We're
talking like centimeters so um so, so intercepting that would
(25:23):
be difficult unless you know everyone's really buddy buddy in
the stores you're shopping right right. So I do think, um,
I do think they've put some some good security measures
in place. I like any kind of electronic transaction, I
think there's probably some risk involved. There's there's no fail
(25:44):
proof system out there. But I would say that again
it I would say that just because yes, there's an
element where there's a element of risk there, but it's tiny,
just like there's an element of risk in every kind
of transaction. You can do yeah, and you know, keep
in mind that anything that isn't an electronic transfer has
(26:05):
its own element of risk to it. It may be
different from the electronic version, but it's still there. So
no no system is perfect. Even we we found out
just this week that topic that we recently talked about bitcoin,
people have been stealing bitcoin. Yeah. I actually did an
update for our bitcoin podcast because of that. Yes, so
(26:27):
you'll be hearing. Actually you've already heard that. So when
you when you unless something has gone terribly wrong, you've
heard our bitcoin episode and so you will have heard
the update that I gave at the end of it. Um,
So did you want to talk about the offers? Yeah,
I want to talk with very briefly about Google Offers.
So Google Offers is kind of Google's answer to things
(26:50):
like group on, scout Mob. There are other lots of
living social, There are a lot of other services out
there that offer deals or cop ponds for specific goods
and services. And these are awesome, right, you know, you
get this this deal and maybe it's uh, you know,
it's maybe it's a place that you've never been before
(27:11):
and you want to check it out. Maybe it's a
place you go to all the time, and you want
to be able to use the offer towards some sort
of goods or service um or maybe you never would
have thought to go there at all, but this has
convinced you too, because the deal is just so darn good. Um. Well,
in most cases with this kind of thing, you you,
(27:32):
especially if it's a mobile app, you get some sort
of deal that you have to show at whatever the
vendor is, you know, whoever is, whoever is offering the
goods or services. So let's say, for example, I can
give a specific example. I used a a h an
app to get discount tickets to a local theater, and
(27:55):
the stage theater, not a movie theater, And so I
went to the theater and then I had to pull
up the app and show that I had activated that
particular offer, and I showed it at the door and
they applied the discount and then I got my tickets. Well,
with Google offers partnered with Google Wallet, it's not always
going to be the case, because you know, you have
(28:16):
to have the vendor using the system too. But let's
say that you have a Google offer for that particular place,
and you're using Google Wallet to pay for your whatever.
So let's say I'm going to the theater and they
have the system there. I could tap my phone to
that and it would automatically apply that coupon to the
purchase without me having to do a separate step of
showing the offer to someone else. And the same is
(28:38):
true again with the loyalty cards. So you might have
a particular place you go to a lot and uh,
you have your loyalty benefits, you have a coupon, and
you've got this uh, this Google Wallet system. All you
do is with one tap, you make your purchase and
everything is applied to that one uh, that one transaction.
(29:00):
And this is really a compelling service to me because
it simplifies everything, and you might even get to the
point where you're not even fully aware of all the
things that are looped in offers. So, for example, let's
say there are a lot of grocery stores that have
the loyalty cards, right, and you get certain deals when
(29:24):
you go shopping that other people who do who are
not part of the loyalty program, they don't have access
to those deals. And let's just say you're going on
a normal shopping trip and you're not even really paying
attention as you're purchasing your stuff. You know, you're getting
the brands you like, and you're getting whatever products you want,
and you go to check out and you tap your
phone and if there were any offers, that automatically gets
(29:45):
applied to whatever it was you were purchasing, and uh
and again it cuts down on the stuff you have
to remember to carry with you. So, for example, I
used my loyalty uh key fob things so much at
our grocery store that it eventually wore through and broke
off my key chain. And now I don't have it
(30:05):
with me all the time because I never bothered to
replace it because I was like, well, you know, it's
more walking. Yeah. I actually uh got an app from
my smartphone that has the ability to put the barcodes
on the screen. So theoretically you're supposed to just uh
scan your your phone screen in front of the thing
(30:26):
and it will read your loyalty card number. I can
tell you I think probably because of the screen protector
on my phone, I could never get it to read properly,
especially on the well on the youth scan lanes that
you know, I kind of nervous given your phone to
the cashier. But you know, on the youth scan thing. Well,
it's just me. I'm gonna get it, you know, right,
(30:46):
you know, I sat there for ten minutes. The people
were hitting me behind from behind with oranges and that
like the old the old days when they first got
the scanners, and the person would the cashier would scan something.
Nothing would happen. Scan it, nothing would happened. Scan it,
nothing would happen. Stop, look at the sticker, put it
back down, scan it, nothing would happen. Yeah, it's like that, um,
(31:07):
But a near field communication system would completely scanning, scanning, needing,
just need to get it close enough to and for vendors,
for vendors that are participating with Google Offers but are
not participating with Google Wallet, you would still do the
scanning thing, right. You would have to open up your
Google Offers part of your Google Wallet and show off, hey,
(31:27):
I've got this coupon. So you would still do it
the older way through that method. But if they are
working with the Google Wallet system, then again it's just
one tap and you go, I think it's a sorry
you were going to say something, Well, you can go
ahead and say that. I think it's all I was
just gonna say. I think it's an interesting product and
I think I think it has a lot of potential. Um,
(31:49):
I know that there are a lot of other companies
that are looking into similar ways of doing payments. You've
also got the other services like group on, You've got
services like Living Social. They're they're handling the offers side
of it. They're not necessarily partnered with the payment side
of it yet, although that may change. Yeah, that's exactly
(32:09):
where I was gonna go because American Express and UH
four square are currently working together. UM. Now these are
with the plastic card not you know, there's not an
electronic wallet, but you figure with American expresses clout UH,
they would easily be able to do this. And yeah,
I mean you it is the similar situation, just not
with your phone. If you go with you find the
(32:32):
deal on four square. When you're out someplace where you
check in UH and you have your American Express card
with you and you pay with it, it should automatically, um,
you know, give you the discount. And that's that's the
trial they ran out of south By Southwest. And there's
also a group on now, which is something they're doing
where it's trying to give you an instant offer rather
than something that you redeem later, which is traditionally how
(32:55):
a lot of these deals have worked. Um. And then
you've got you know, like we of the Nexus S
four G is on Sprint, and that's the only carrier
right now that is supporting this whole endeavor. Um. There
there's also talk that the other major carriers in the
United States, which of course our A, T and T,
T Mobile and Verizon, are all working on their own
NFC proprietary approach to payments, which means that we could
(33:19):
have a another sort of standards war to determine which
if any of the four come into uh prominence. And
you know, so it may be that it's it's a
divided market where it all depends upon which carrier is
in charge of your your cell phone plan. So yeah,
(33:42):
we're still gonna be kind of keeping an eye on this,
and you know, hopefully we're gonna have systems that will
go across all carriers so that it makes it simpler
for everybody. Right because assuming that the the scanning platforms,
the FC consoles where you tap the phone against it,
(34:03):
assuming they can read all the different variations of this, well,
then that would be fine, right because then it wouldn't matter,
like if the if the vendor end is agnostic toward
which platform you're using, that would be best. But if
you go there and you're like, I've got this on
my phone and you tap it. Oh wait, you're a
T Mobile customer. Sorry, we only we only use this
(34:24):
for Sprint, that would be very frustrating from a consumer standpoint,
to the point where you're like, what's the point of this. So, um,
it's early days yet, We'll have to see and and uh,
it's not that I hope that Google is triumphant and
gets that the total market share for this. Um. I
think the competition is a great thing. I just want
(34:46):
to make sure that the competition is such that it
doesn't hurt the consumer experience. So I want to make
that clear though, that I'm not trumpeting Google and saying
I hope that they crush everyone under the heel of
their enormous school colplex boot. Yeah it's uh, these boots
were made for Google. It's convenient enough, and people are
(35:07):
there certainly enough smartphones out there where I think the
market may be more ripe than it has been in
the past. Um, but I still think it will will
take some time. To catch on Bolton, who I mentioned
earlier from the week. Also, Uh in his article mentioned
that Uh, in addition to security concerns, he thinks that
(35:32):
it's possible that basically apathy consumer apathy will win out
and that none of the you know, Google wallet just
won't succeed in the long run. Um, I'm not so
sure that security or apathy are are gonna beat UM
the convenience of NFC unless there are just some horrific problems.
(35:54):
I mean, you know, with all of it, the hacking
that's been going on lately, with UM, everybody, with every buddy,
I just don't know that it's it's going to register.
You know, at this point, it may ultimately not matter
if you if you demonstrate that the financial systems aren't
secure on their end, that doesn't matter what you're carrying
in your wallet. Yeah, that's whether it's virtual or physical.
(36:17):
And I mean that's a scary thought. But we've already
seen it happen. You know, we've seen credit card companies
get attacked by hackers, and we've seen you know, other
companies that are not directly connected to financial institutions but
are indirectly connected. And that's the way in and so yeah,
it's a scary thing. But I mean and people who
have been able to decrypt a pin block um that
(36:40):
they've hacked, which which was at one time considered you know,
highly secure because you have the credit card number encrypt
or the debit card number encrypted plus the pin block
encrypted different separately, and they said, oh, yeah, well with
that level of security, you're not going to get it. Yeah,
they've found ways to get that. Ever, say that your
ship is unsinkable, so you can also get mugged on
(37:01):
the way to the have your cash taken from you.
So the message you should take from this episode is
the world is dangerous and they're all out to get you. So,
if you guys have any other topics you would like
us to talk about on tech Stuff, you can let
us know on Facebook or Twitter or handled there as
tech Stuff h s W, or you can send us
an email That address is tech stuff at how stuff
(37:22):
Works dot com and Chris and I will frighten you
again really soon. Be sure to check out our new
video podcast, Stuff from the Future. Join how Stuff Work
staff as we explore the most promising and perplexing possibilities
of tomorrow. The house Stuff Works iPhone app has arrived.
Download it today on iTunes, Brought to you by the
(37:48):
reinvented two thousand twelve camera. It's ready, are you
Brought to you by the reinvented two thousand twelve Camray.
It's ready. Are you get in touch with technology? With
tech Stuff from how stuff works dot com. Hello again, everyone,
Welcome to tech stuff. My name is Chris Poulette and
(00:20):
I'm an editor at how stuff works dot com. Sitting
across from me, as always senior writer Jonathan Strickland. It
ain't fair how we scrounged for three or four bucks
while she gets warbucks. The little brat as always excellent.
Thank you. So we're gonna talk about Google Wallet today, indeed,
(00:41):
and Google Wallet was a project that was announced back
in I think May of eleven. It is now late
June twenty eleven when we're recording this podcast, but we
wanted to kind of talk about it and kind of
go over what the implications of the the product is.
Our gosh, I'm so tired. I've just got back from
(01:01):
vacation and my my ability to speak in coherent sentences
with proper grammar is sorely depleted. Yes, yes, so Google
wallet fire bad. Um. Anyway, so we wanted to talk
about what Google walle it is, how it works in
a kind of bird's eye view level and what it
(01:21):
might mean to the future of making purchases. Yeah, it's
funny because this is not really a new topic at all,
but it's new to many people here in the United
States because I mean, this is the kind of thing
that's been going on for many years over in Asia. Yeah,
Japan in particular, Japan in particular. Um, basically the idea
of being that you could uh store payment information in
(01:45):
your cell phone or smartphone and uh use that information
to make a payment when you go to a store. Yes,
so instead of scanning a you know, swiping your credit
card and signing a little digital thing, or or having
to put in your pin number if you're using a
debit card, or even using a credit card that has
(02:06):
an r F I D chip in it where you
know you'll you'll see those consoles at certain vendors where
you can tap the card and that registers as a payment. Uh,
instead of using a card at all, it would be
stored on your phone. And you might ask, well, why
would you even bother to do that, Like, why why
have it on your phone? As opposed to if you
if it's replacing tapping a card, how does that make
(02:29):
it easier? If you put it on a phone, and
that's a that's a legitimate question. I mean, one answer
you could arguably give is that, well, you cut down
on the things you need to carry. But when you're
talking about a credit card, it's not like that's a huge,
bulky thing that's really weighing it down. In fact, it's
much smaller form factor than a cell phone or smartphone.
So really the value in the proposition is that Google
(02:53):
has has grouped this ability to pay through a a
smartphone own with other services that kind of make it
more of an attractive service. It's not it's not just
that you can pay with a smartphone. There are other
features that are involved that are pretty cool. Yeah. And
in addition to that, Google says that it doesn't intend
(03:16):
to replace a credit card. It intends to replace all
of your credit cards and your loyalty cards. Does the
cards that you carry around with you to UM. You know,
if you you're at your grocery store and you get,
you know, fifty cents off a can of tomatoes if
you have the card, UM, basically you're selling them your
information so they can market to you. But you also
(03:38):
exchange they'll give you a discount, and you also get yeah,
so not just loyalty cards, but also coupons, like electronic coupons.
So so there might be a loyalty program. For example,
here's an easy one. My wife really likes coffee, right,
so she has loyalty cards with practically every coffee shop
that is in a ten mile radius of our home. Yeah.
(04:03):
Her loyalty to coffee as legendary, Yes, to the point
where you know, she has to sort through her loyalty
cards when she goes into a coffee shop to determine
which one of her cards applies at that shop. And
so you know, it's one of those things where you know,
you buy nine coffees and the tenth one is free,
same sort of thing, except it stored electronically on your phone,
and so it the the application of Google Wallet keeps
(04:24):
track of how many times you've been to this particular
place and bought a particular thing, and then automatically registers
when you hit ten, and so when you go to
pay it registered, it files that information for you. It's
the same as if your card had been stamped a
tenth time, and then you don't have to uh and
want you don't get the price of the coffee deducted
(04:46):
from your account or charged to your card. Um. And
before we get too far into this, just before we
launch into it, I wanted to mention UH that we
do have an article about paying UH with a cell phone.
In fact, it's called can you use a cell Phone
as a credit Card? And Julia Layton wrote that article
and it's a UM. If you go and read the article,
(05:07):
you'll actually notice that there's some mention of of this
debuting in the United States back in two thousand seven,
and not Google Wallet, but the ability to pay using
using a phone as a credit card. Now, keep in mind,
even two thousand seven is late to the game compared
to Japan. That's that's true. That's true. UM. I just
wanted to go before we go any further to UM.
(05:29):
Google is also saying that in addition to loyalty cards
and credit cards, Google says that it that Google Wallet
will eventually allow you to use gift cards, receipts, boarding passes,
UM and and possibly your keys UM available through Google Wallet.
So UM it would in fact, in theory be able
(05:51):
to reduce the amount of stuff you would need to
carry in your wallet. Now, I noticed there's no driver's
license mentioned in their passport. That would be interesting to see.
Although passports in the United States do have a radio
frequency identification chip, Yes they do. So I have a
little little wallet that blocks that. Yes, mine. We'll talk
about that later too, because that's gonna come up. But
(06:14):
we should probably talk about the you know, how it
works and the benefits of using it. Sure now, when
they were when Google was launching this, they were talking
about two specific other partners with this. Yes, there are
also thousands of vendors that are going to support this,
but the two partners specifically that I wanted to talk
(06:36):
about where Sprint because the phone that they're debuting the
Google Wallet service on is the Nexus S four G,
which is only on Sprint, Yes, all right. And then
City MasterCard, which is that you know, that's where that's
got the financial backing. That's so if you want to
have Google Wallet, you have really two choices as far
(06:58):
as what kind of payment option you go with. You
can either apply to get a City MasterCard account, or
if you already have one, you can enter that information
into Google Wallet and that will become your Google Wallet account.
Or you can get a Google Prepaid card and Google
Prepaid Card is you know, it's essentially what sounds like,
(07:21):
you can you can put money into your Google Prepaid
card and use that for payments, kind of like you know,
like pay Pal or any other sort of gift card
kind of approach. Um, And what's kind of interesting is
that if you do the Google prepay approach, they will
actually credit you ten dollars in your account, so you'll
get ten bucks for free. Yeah, I thought that was
(07:44):
pretty funny. Actually, and at least until um the end
of twenty eleven, you will not have to pay any
fees to add money to your Google Prepaid card. So,
in other words, it's not like you get a service
feed up added on top of you know, you want
to add say a hundred dollars to your Google Prepaid card,
(08:04):
You're not going to get a service fee of five
bucks on top of that, at least until the end
of twenty eleven. Now, uh, what does that mean that
in they'll start adding in a service fee. Maybe we
don't know. But the wording is specifically about till the
end of or at least until the end of twenty eleven,
is how they put it. So, um, yeah, you've got
(08:25):
so you've got the that's the backing as far as
payment goes, so it's either City MasterCard or the prepaid card,
which you can use any credit card to purchase money
to go toward the prepaid card. You don't have to
have a City master Card for that one. Uh. Well,
what about the actual payment process, like, how does this
(08:48):
transfer happen? Well, it happens through UM something called an
NFC chip. Yes, that's near field communication. UM. This is
a little different from the r F I D chip
that you find in your UH and some of your
credit cards, which is if you if you have one,
you'll know it. It's that that little uh usually gold
(09:09):
color or silver colored UM piece of metal embedded in
the chip. Basically that has your your information UH in
it so that when you UH take it near one
of those paid UH pads and you touch it to
that the pad can read that of course. UM. You know,
basically it's as far as you know, it's not electronic
(09:32):
or anything like that. It doesn't have you know, need
a battery or anything to operate. UM. So it's it,
but it's essentially always on. There's nothing keeping it from
being read at any time, which is one of the
criticisms people have of R f i D chips, and
as Jonathan was saying, he's got apparently he carries a
Faraday cage in his wallet. It's a it's it's a
(09:55):
special case that has r f i D blocking material,
or not r f i D blocking material, but blocks
radio frequencies. Right, So if somebody had something that could
if he weren't carrying that, and somebody had something that
could pick up an r f i D chip near enough,
and they just you know, bumped into him in public,
(10:16):
say like a pickpocket might, except without having to pick
his pocket, they could read the number off of the card. Um.
I also find that having r f i D chips,
multiple r f i D chips in my wallet will
interfere with things like the UH rapid transit system in Atlanta.
If you have another r f i D chip, it
(10:37):
will you know, they'll the two signals will cancel each
other out and say I can't read that the wallet. Um,
that's annoying. It's so irritating having to go all the
way to taking a card out of your wallet to
tap against the little circle so that you can go
in and ride public transportation. Such an inconvenience, But in goodness,
we got rid of that token system. But in contrast, UM,
(11:00):
the near field communication system can be turned on and off,
and there is a transceiver built into UH the NFC
enabled phones in this case the nexus S that will
allow you to transmit that information, so it can be
you can turn it off essentially. UM, now you can
have and you can have a passive NFC system where
(11:21):
where one element is just like with r F I D,
where one element is is active and then the other
one is passive. But in the case of smartphones we're
talking about and both both parts are active. And then
you say, all right, well enough about this, how does
it actually work? All right? Well, uses inductive coupling. Really, yeah,
so we're talking inducing electricity. And if you guys have
(11:43):
been listening to tech stuff for a while, you know
we've talked about this in multiple episodes and including some
of our Basic Electronics episodes and others. So induction, we're
talking about that wonderful relationship between electric electricity and magnetic fields.
So electric fields and the magnetic fields, and so what's
happening with U NFC is that it's you have at
(12:07):
least one element that's producing magnetic field and then you
have another element that has a coil of wire in it.
And when you pass that that chip that has the
coil of wire in it next or through that magnetic field,
it alters the magnetic field, all right, and it alters
it in such a way depending upon the coil of
wire that's in that chip and other elements. It manipulates
(12:30):
that magnetic field in such a way that something that
electricity flows through that active element and then whatever is
supposed to happen theoretically happens. So yeah, exactly. So example,
for example, if it's a locked door and it has
an electric lock that is producing this, it's using near
field communication. UM. You have the little pad on the
(12:51):
door that is actively generating this magnetic field. You pass
your key fob through that magnetic field. It registers that
as the correct uh kind of alteration of that mannetic
field that corresponds to this person has a key to
this office and it will unlock. Now with the smartphones,
you've got the two different magnetic fields that are being generated,
(13:13):
and that's where you can have this communication passed between
the two where essentially you have one asking for identification
and the other one UM making sure that registers that
it's an actual payment. You know, you have to have
this work on both sides for this to to take place.
So um and just in case you're curious, the data
rates that can transfer between two devices in an NFC system, Uh,
(13:39):
there are three different data rates that are possible. And
when you hear how what the speeds are, you gonna think, wow,
that's pretty slow compared to like an Internet connection, like
a broadband Internet connection a hundred six killabits per second,
two twelve kilabits per second, and four four killa bits
per second. But you gotta keep in mind that the
amount of information that's being transferred here minuscule. Yes, you know,
(14:01):
you're talking about some sort of identification, credit card information, um,
and that's it really and well, purchase price or whatever.
But it's tiny in comparison to the amount of data
you get even just loading up a basic web page.
So you don't really need a super fast data transfer
rate in order for this to work. So the smartphones
(14:24):
are using this NFC technology, and the the vendors have
to use it as well. I mean, obviously, even if
you've got Google Wallet and you walk into a store,
there's no guarantee you can use your phone to pay
for whatever you're buying, the vendor has to also have
their half of the system in place, right, So yeah,
you can't just walk up to a cashier and wave
your phone around and it will pay for it. You
(14:44):
might get some funny looks or be politely asked to leave,
or maybe not politely asked to leave. Well, um it does.
If you've seen the MasterCard pay pass system, UM, then
there there are actually play says. There's a on the
Google Wallet UM information site. There is a way to
(15:06):
look up whether or not they're Google Wallet merchants in
your area. And basically any place that has that system
already in place, that system will interact with Google Wallet
or is this it's supposed to? Um? Plus, there are
other places to a lot of the stores that you
might find the malls here UM in the United States,
and some restaurants UM. You know, places like blooming Gale's
(15:29):
or American Eagle, Macy's, um Arby's. Yeah, that's true because
I actually went. Uh. If you go to to Google's
pages on this, they have a little section where you
can type in your zip code and see what what
stores nearby are. UM have that that option and so
I checked for our office just out of curiosity and
(15:51):
saw that there was an Arby's. And uh, it's interesting
because we actually have a couple of really large malls
near our office, and I didn't see a lot of
stores in those malls that had adopted us. Now. Granted,
even though this technology, again the technology itself is not new,
the product and the service are very new. Uh so
(16:11):
it's not a huge surprise that there's not a widespread
adoption yet. But what is interesting to me his Eric
Schmidt has said that he believes within a year there
will be widespread adoption. So, based upon the recording of
this podcast within by June two thousand and twelve, Schmidt
expects that this NFC approach to paying for goods and
(16:34):
services will be widespread. I'm holding him to that. It
would be nice. I mean, especially again we'll get back
to the offers and everything with Google Wallet to talk
about how you know that adds value to their their service. Um,
but uh, I mean it would be nice to know
(16:54):
that we are no longer kind of in the the
relatively dark agents technologically speaking, compared to like Japan. I
know I keep bringing that up, but I mean Japan
is light years ahead of us as far as the
mobile technology goes, you know, I mean they're we're catching
up definitely. And I know that the iPhone is has
become popular in Japan as well, So it's not like, uh,
(17:18):
you know they look at our our brand new toys
and say, man, that was cool five years ago. Well, um, well,
that's something I want to talk about in a minute.
There I wanted to bring up before we got away
from too far away from how it works. I feel
compelled to point out that there is another step. You
don't just tap your phone to the pad and you know,
(17:41):
say thank you very much, here's your receipt. There is
another step. Now you you might be wondering, uh, you know,
how does it know it's me? You have to enter
a pin on your phone. Your phone has to be
on if it if it is off, if you've run
out of battery, you've run out of cash or not cash.
But you know, um yeah, you can't usually can't use
it anymore because it's got to be able to receive
(18:04):
a signal. Now you don't have to have a a
phone signal where you are. So you're in a really
giant mall um away from a tower, and you're way
from a tower and you can't get a signal. Why,
I can't imagine the mall that wouldn't have its self.
But there's there are places. There are places near where
I live that are right around the corner where I live,
and there are certain stores that if you go into it,
(18:27):
it's like they've built a fair day cage around that
store because you can't your signal drops like a like
like a like a stone, like like something that drops
very like something that it hung in the air, the
same way bricks. Don't I love that? Um? But yeah,
you have to you have to be able to identify yourself.
The phone has to be on for you to complete
the transaction. UM. As a matter of fact, the uh,
(18:50):
the information is stored in something that Google is calling
the Secure Elements. Yes, it's not. It's not connected directly
to the Android processing chip. That was a very important
part of Google's presentation. They wanted to make sure that
everyone understood the what measures they had taken to ensure
security of this, because you know you could you could
clearly any time you're talking about transmitting data wirelessly. There's
(19:14):
this whole fear that there's a way that that data
could get leaked and compromised. And of course we all
know that you don't have to transmit data wirelessly in
order for your information to be compromised. I know this
from recent personal experience. But um, but any time that
you see that that medium of exchange, that's one of
(19:38):
the concerns you have, right. So, yeah, the secure element
is is completely separate from the Android processor and the
apps that Google walad app does not directly um access
the secure element. So, in other words, they wanted to
make sure that if you were to, say, lose your phone,
(19:59):
that getting hold of your credit card information would not
be an easy thing to do. Now, that's not to
say that some enterprising hacker couldn't figure out a way
to do it. So even if you were to lose
your phone, the Google stresses that you should immediately contact
your your bank or other financial institution, or to change
your credit cards, canceled them out and get new ones,
(20:21):
because you know, you never want to just entrust and
say that something is completely secure from all possible attacks.
Because we all learned a lesson from Titanic, well, Uly
Leonardo DiCaprio is dreamy well, and in the case of
the uh nexus s the secure element is an n
(20:43):
x p p N six K chip. I'll sure give
it away now everyone knows. According to Clinton Bolton from
E Week, UM and yeah, lest you think, as I
saw in comments on his article, UM, that we are
necessary early spreading fear, uncertainly, uncertainty and doubt, all otherwise
(21:05):
known as fud UM. I just I feel compelled to
report um as other people did. I saw this person
quoted a couple of times UM McAfee security expert UM
Jimmy Shaw, who basically was saying that based on what
he knows the system, it's not that the system isn't
(21:26):
designed with security in place, he you know, so much
as he thinks that it might be possible to take
the authentication key from the Google Wallet application itself and
uh rite an application that will allow somebody to fool
the secure element into giving up what it has. It's
(21:47):
not the secure element that he sees as the weak
link the app as being reverse engineer able to get
at whatever the you know your PIN number and just
it yes, sorry, you know pin? Actually the end of
the personal number, the personal identification number number, UH your
(22:09):
Windows phone. Now we're talking to Android I'm sorry. Yes, yeah,
they basically they feel that it's possible to do that. Now, um, yes,
you could say that Google has gone to a lot
of trouble to ensure that it's not going to be
easy to make this happen. Um and and and people
uh who like this idea are probably saying no, you're
(22:34):
just saying this, and it's it's very unlikely. Yes, it's unlikely,
but it's possible. It's a good idea to keep that
in mind. Just like any bank, it's possible that it
could get robbed. It's likely, but it's possible, and it's
possible you could have your card skimmed when you go
to a machine or that it is very possible, and
(22:56):
you know that there might be a very tiny camera
recording your movements that you so anyway the but but
also we should keep in mind that Android phones have
um have optional or locking systems on them as well.
So that's as a second level of security, which is
separate from the Google wallet. Like that's just so that
(23:18):
you can use your phone. So for example, if you
were to pick up my phone, you would find out
that there is a security code that you would need
to enter in order to access my phone. Now, yes,
there are ways of getting around that if you know
how to hack the phone properly. But again it's that
level of security that discourages you know, a major percentage
(23:38):
of the people who would otherwise try and take advantage
of finding your phone. So you know, no security system
is gonna be perfect, but you try and make it
strong enough so that the cases are our failures. And
then again, as I said before, Google does stress that
you have to let your financial institutions know so that
(23:58):
you can you can make sure that no one can
use that card against you. Um. And also they have
an element in place where it prevents you from creating
a week password or a weak pen. Yeah, so if
you were to try doing one one one one as
your pen so that you wouldn't have to remember it
whenever you're using Google Wallet, it will reject that and
make you choose something that's not going to be the
(24:20):
same digit four times or four sequential digits either up
or down. That kind of thing. Tony Bradley is sorry,
Tony Tony Bradley of PC World, Um, it sounds like
you may have read the same article because it's um
this one also quoted Jimmy Shaw, uh but um he
(24:40):
had Bradley spoken with Google specifically about some of these things,
and Google said that Google Wallet itself does not have
access to the credit card information uh in the secure element.
Um so you know, basically they you know, they're they're
stressing that it really is a secure way of doing this.
(25:00):
Plus the uh uh. They added that the transceiver is
off if your your phone screen is off. So as
long as your screen is off, it is not there's
no way that it's supposed to be able to transmit information.
And near field communication works over very short distances. We're
talking like centimeters so um so, so intercepting that would
(25:23):
be difficult unless you know everyone's really buddy buddy in
the stores you're shopping right right. So I do think, um,
I do think they've put some some good security measures
in place. I like any kind of electronic transaction, I
think there's probably some risk involved. There's there's no fail
(25:44):
proof system out there. But I would say that again
it I would say that just because yes, there's an
element where there's a element of risk there, but it's tiny,
just like there's an element of risk in every kind
of transaction. You can do yeah, and you know, keep
in mind that anything that isn't an electronic transfer has
(26:05):
its own element of risk to it. It may be
different from the electronic version, but it's still there. So
no no system is perfect. Even we we found out
just this week that topic that we recently talked about bitcoin,
people have been stealing bitcoin. Yeah. I actually did an
update for our bitcoin podcast because of that. Yes, so
(26:27):
you'll be hearing. Actually you've already heard that. So when
you when you unless something has gone terribly wrong, you've
heard our bitcoin episode and so you will have heard
the update that I gave at the end of it. Um,
So did you want to talk about the offers? Yeah,
I want to talk with very briefly about Google Offers.
So Google Offers is kind of Google's answer to things
(26:50):
like group on, scout Mob. There are other lots of
living social, There are a lot of other services out
there that offer deals or cop ponds for specific goods
and services. And these are awesome, right, you know, you
get this this deal and maybe it's uh, you know,
it's maybe it's a place that you've never been before
(27:11):
and you want to check it out. Maybe it's a
place you go to all the time, and you want
to be able to use the offer towards some sort
of goods or service um or maybe you never would
have thought to go there at all, but this has
convinced you too, because the deal is just so darn good. Um. Well,
in most cases with this kind of thing, you you,
(27:32):
especially if it's a mobile app, you get some sort
of deal that you have to show at whatever the
vendor is, you know, whoever is, whoever is offering the
goods or services. So let's say, for example, I can
give a specific example. I used a a h an
app to get discount tickets to a local theater, and
(27:55):
the stage theater, not a movie theater, And so I
went to the theater and then I had to pull
up the app and show that I had activated that
particular offer, and I showed it at the door and
they applied the discount and then I got my tickets. Well,
with Google offers partnered with Google Wallet, it's not always
going to be the case, because you know, you have
(28:16):
to have the vendor using the system too. But let's
say that you have a Google offer for that particular place,
and you're using Google Wallet to pay for your whatever.
So let's say I'm going to the theater and they
have the system there. I could tap my phone to
that and it would automatically apply that coupon to the
purchase without me having to do a separate step of
showing the offer to someone else. And the same is
(28:38):
true again with the loyalty cards. So you might have
a particular place you go to a lot and uh,
you have your loyalty benefits, you have a coupon, and
you've got this uh, this Google Wallet system. All you
do is with one tap, you make your purchase and
everything is applied to that one uh, that one transaction.
(29:00):
And this is really a compelling service to me because
it simplifies everything, and you might even get to the
point where you're not even fully aware of all the
things that are looped in offers. So, for example, let's
say there are a lot of grocery stores that have
the loyalty cards, right, and you get certain deals when
(29:24):
you go shopping that other people who do who are
not part of the loyalty program, they don't have access
to those deals. And let's just say you're going on
a normal shopping trip and you're not even really paying
attention as you're purchasing your stuff. You know, you're getting
the brands you like, and you're getting whatever products you want,
and you go to check out and you tap your
phone and if there were any offers, that automatically gets
(29:45):
applied to whatever it was you were purchasing, and uh
and again it cuts down on the stuff you have
to remember to carry with you. So, for example, I
used my loyalty uh key fob things so much at
our grocery store that it eventually wore through and broke
off my key chain. And now I don't have it
(30:05):
with me all the time because I never bothered to
replace it because I was like, well, you know, it's
more walking. Yeah. I actually uh got an app from
my smartphone that has the ability to put the barcodes
on the screen. So theoretically you're supposed to just uh
scan your your phone screen in front of the thing
(30:26):
and it will read your loyalty card number. I can
tell you I think probably because of the screen protector
on my phone, I could never get it to read properly,
especially on the well on the youth scan lanes that
you know, I kind of nervous given your phone to
the cashier. But you know, on the youth scan thing. Well,
it's just me. I'm gonna get it, you know, right,
(30:46):
you know, I sat there for ten minutes. The people
were hitting me behind from behind with oranges and that
like the old the old days when they first got
the scanners, and the person would the cashier would scan something.
Nothing would happen. Scan it, nothing would happened. Scan it,
nothing would happen. Stop, look at the sticker, put it
back down, scan it, nothing would happen. Yeah, it's like that, um,
(31:07):
But a near field communication system would completely scanning, scanning, needing,
just need to get it close enough to and for vendors,
for vendors that are participating with Google Offers but are
not participating with Google Wallet, you would still do the
scanning thing, right. You would have to open up your
Google Offers part of your Google Wallet and show off, hey,
(31:27):
I've got this coupon. So you would still do it
the older way through that method. But if they are
working with the Google Wallet system, then again it's just
one tap and you go, I think it's a sorry
you were going to say something, Well, you can go
ahead and say that. I think it's all I was
just gonna say. I think it's an interesting product and
I think I think it has a lot of potential. Um,
(31:49):
I know that there are a lot of other companies
that are looking into similar ways of doing payments. You've
also got the other services like group on, You've got
services like Living Social. They're they're handling the offers side
of it. They're not necessarily partnered with the payment side
of it yet, although that may change. Yeah, that's exactly
(32:09):
where I was gonna go because American Express and UH
four square are currently working together. UM. Now these are
with the plastic card not you know, there's not an
electronic wallet, but you figure with American expresses clout UH,
they would easily be able to do this. And yeah,
I mean you it is the similar situation, just not
with your phone. If you go with you find the
(32:32):
deal on four square. When you're out someplace where you
check in UH and you have your American Express card
with you and you pay with it, it should automatically, um,
you know, give you the discount. And that's that's the
trial they ran out of south By Southwest. And there's
also a group on now, which is something they're doing
where it's trying to give you an instant offer rather
than something that you redeem later, which is traditionally how
(32:55):
a lot of these deals have worked. Um. And then
you've got you know, like we of the Nexus S
four G is on Sprint, and that's the only carrier
right now that is supporting this whole endeavor. Um. There
there's also talk that the other major carriers in the
United States, which of course our A, T and T,
T Mobile and Verizon, are all working on their own
NFC proprietary approach to payments, which means that we could
(33:19):
have a another sort of standards war to determine which
if any of the four come into uh prominence. And
you know, so it may be that it's it's a
divided market where it all depends upon which carrier is
in charge of your your cell phone plan. So yeah,
(33:42):
we're still gonna be kind of keeping an eye on this,
and you know, hopefully we're gonna have systems that will
go across all carriers so that it makes it simpler
for everybody. Right because assuming that the the scanning platforms,
the FC consoles where you tap the phone against it,
(34:03):
assuming they can read all the different variations of this, well,
then that would be fine, right because then it wouldn't matter,
like if the if the vendor end is agnostic toward
which platform you're using, that would be best. But if
you go there and you're like, I've got this on
my phone and you tap it. Oh wait, you're a
T Mobile customer. Sorry, we only we only use this
(34:24):
for Sprint, that would be very frustrating from a consumer standpoint,
to the point where you're like, what's the point of this. So, um,
it's early days yet, We'll have to see and and uh,
it's not that I hope that Google is triumphant and
gets that the total market share for this. Um. I
think the competition is a great thing. I just want
(34:46):
to make sure that the competition is such that it
doesn't hurt the consumer experience. So I want to make
that clear though, that I'm not trumpeting Google and saying
I hope that they crush everyone under the heel of
their enormous school colplex boot. Yeah it's uh, these boots
were made for Google. It's convenient enough, and people are
(35:07):
there certainly enough smartphones out there where I think the
market may be more ripe than it has been in
the past. Um, but I still think it will will
take some time. To catch on Bolton, who I mentioned
earlier from the week. Also, Uh in his article mentioned
that Uh, in addition to security concerns, he thinks that
(35:32):
it's possible that basically apathy consumer apathy will win out
and that none of the you know, Google wallet just
won't succeed in the long run. Um, I'm not so
sure that security or apathy are are gonna beat UM
the convenience of NFC unless there are just some horrific problems.
(35:54):
I mean, you know, with all of it, the hacking
that's been going on lately, with UM, everybody, with every buddy,
I just don't know that it's it's going to register.
You know, at this point, it may ultimately not matter
if you if you demonstrate that the financial systems aren't
secure on their end, that doesn't matter what you're carrying
in your wallet. Yeah, that's whether it's virtual or physical.
(36:17):
And I mean that's a scary thought. But we've already
seen it happen. You know, we've seen credit card companies
get attacked by hackers, and we've seen you know, other
companies that are not directly connected to financial institutions but
are indirectly connected. And that's the way in and so yeah,
it's a scary thing. But I mean and people who
have been able to decrypt a pin block um that
(36:40):
they've hacked, which which was at one time considered you know,
highly secure because you have the credit card number encrypt
or the debit card number encrypted plus the pin block
encrypted different separately, and they said, oh, yeah, well with
that level of security, you're not going to get it. Yeah,
they've found ways to get that. Ever, say that your
ship is unsinkable, so you can also get mugged on
(37:01):
the way to the have your cash taken from you.
So the message you should take from this episode is
the world is dangerous and they're all out to get you. So,
if you guys have any other topics you would like
us to talk about on tech Stuff, you can let
us know on Facebook or Twitter or handled there as
tech Stuff h s W, or you can send us
an email That address is tech stuff at how stuff
(37:22):
Works dot com and Chris and I will frighten you
again really soon. Be sure to check out our new
video podcast, Stuff from the Future. Join how Stuff Work
staff as we explore the most promising and perplexing possibilities
of tomorrow. The house Stuff Works iPhone app has arrived.
Download it today on iTunes, Brought to you by the
(37:48):
reinvented two thousand twelve camera. It's ready, are you
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