Put to the Test, Google Wallet Delivers

When my friend’s wallet was stolen last week, the thief didn’t use her credit card as you might think. The culprit was actually able to take my friend’s ID to the bank and extract money from her checking account!

How’s that for banking security?

Yes, the story definitely had me clutching my wallet a little tighter. But I also couldn’t help but think of an application that could soon replace our wallets completely, so no one would have to worry about a situation like this again.

Of course, I’m talking about Google (Nasdaq: GOOG) Wallet, a mobile payment application that relies on a Near-Field Communication (NFC) chip embedded in a smartphone to turn the device into a digital wallet.

I’ve written about the technology for months now, focusing mainly on the application’s superior security features compared to those in your wallet.

You see, unlike cash and credit cards, Google Wallet is protected by up to two PIN codes, and information sent from the NFC chip is encrypted three times over. In other words, if a thief steals your phone, he won’t be able to access your funds without the necessary codes.

Advanced security aside, how well does the app work in the real world?

That’s something I got to find out over the weekend…

Bypassing Verizon’s Blockade

Back in December, I ranted about Verizon (NYSE: VZ) removing Google Wallet from its Galaxy Nexus phones.

And while at the time there was a way around Verizon’s restrictions, it required rooting the phone (i.e. – hacking the device to gain deeper access to the operating system). Too high a barrier to entry for the more casual mobile user.

But on Friday, the bar lowered enough for my tastes and I was finally able to download Google Wallet without rooting the device. Sadly, though, it wasn’t because Verizon finally released the app.

A post from Droid Life pointed me to a video that shows how to download the app step by step. It wasn’t as easy as downloading it from the Android Market, but it’s the easiest way to access the app so far.

Here’s the video if you’re interested:

And now that I’ve had a few days to test it out, here’s a brief rundown of my experience with the app…

~ Adding Money: Google Wallet comes with a prepaid card that you can add funds to as needed.

You just hit the “Add Funds” button, select the desired amount and enter your credit card information. That information is then saved so it’s easy to top off your card next time around.

As a nice bonus, Google automatically puts $10 on the prepaid card so users can test the app for free.

Of course, it would be more convenient if I didn’t have to constantly recharge the card. But for now, only those with a Citigroup (NYSE: C) MasterCard are able to link their Google Wallet directly to a credit card account.

~ Finding Locations: I’ve written before that since MasterCard’s PayPass terminals can be found at over 300,000 locations, Google Wallet should be able to hit the ground running.

However, putting this into practice is another story, considering there are only three qualifying merchants within walking distance of my metropolitan location: McDonald’s (NYSE: MCD), 7-Eleven and Rite Aid (NYSE: RAD).

As a result, I was only able to use the app twice this weekend.

~ The Checkout Process: One convenient feature of Google Wallet is that you don’t have to open the application to make a payment. That’s a nice touch, because fumbling around with your phone when you’re supposed to be paying is a good way to get dirty looks from the other people in line.

To pay, you just unlock your device – which you can set up to require a PIN code – then tap the phone to the PayPass terminal. Enter another PIN code for Google Wallet. Tap the phone again, and you’re all set.

If you plan on making several purchases in a row, you can also extend the amount of time Google Wallet requires a PIN by up to 30 minutes. You can also make the PIN time out every minute if you want to make it even more secure.

Both times I used the application – first at 7-Eleven and then at McDonald’s – the process went smoothly.

In fact, I got an “Oh my god, that’s the coolest thing I’ve ever seen” from the McDonald’s cashier. And she added that her next phone might be the Galaxy Nexus now, instead of the iPhone 4S.

Now that’s an endorsement.

Overall, I’m very impressed with the application. It’s intuitive, fast and it certainly beats the risk of taking your wallet out of your pocket all the time.

With that said, the application’s biggest hurdle by far is getting retailers on board with NFC-enabled card readers. Because consumers won’t be sold on the app until they can actually leave their wallet at home.

But since that’s a problem any NFC application is going to run into in the coming months, I’m interested to see how Google Wallet’s biggest competitor – ISIS – plans on solving the issue this year.

Good investing,

Justin Fritz

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When my friend’s wallet was stolen last week, the thief didn’t use her credit card as you might think. The culprit was actually able to take my friend’s ID to the bank and extract money from her checking account! How’s that for banking security? Yes, the story definitely had me clutching my wallet a little...

Justin Fritz

, Executive Editor

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