Google Wallet and the Payment Wars

Google announced a new NFC program for mobile payments that uses the embedded chip on the new model of google phone with hopes that NFC will become the standard in the next generation of smart phones. This means google has already identified partners for payment processing, being the major credit card providers. The bigger implication will be their power to crush groupon. Google Deals can be tied to payment through Google Wallet and vice versa. Deals can be open ended or tied to a specific merchant.

A crucial element of this, even more than NFC enabled phones is NFC enabled point of sale (POS) systems. Having Checkouts that accept this form of payment is a requirement. Google should look to partner with mobile tech early adopters that have a customer base that is in the target demographic for mobile payment users. My shortlist: The Gap, Best Buy, Old Navy, Macy's, Express, Home Depot, Journeys.

If google wants to own payments and deals for consumers, square wants to own the spending, transaction, and card swiping for mobile devices. A new iPad cash register app makes the free square adapter and app a pair of small business essentials. Google boasted in the announcement press conference that they want to parter with everyone (referring to phone makers). But a partnership with Square could make the most sense. The next generation of square card readers could be NFC enabled and Square could go from a collector to a two way receiver for any iPhone or android (and other brands are an app away). And Squares forecasted 2.9% of $1 Billion in forecasted transactions in 2011 should help them get started and a play toNFC just makes sense.

NFC is perfect for parents, put a little money down and see where they use it. Security will be a concern. If Google Wallet or Square (or whatever startup moves mobile payments into the mainstream) want to be the leader, they will have to be the first to convince thepublic that the technology is safe. If it's easy to use and helps you track and manage your money, mobile payments will be the standard. But merchants and phone makers need to be convinced first or the whole thing is a non starter.

I am looking out for the first "tap phone here to pay" sign at the checkout counter.