Join our Waitlist for Expert Advice!

Is Google Wallet the Next Step in Mobile Payments? New 'contactless' mobile payment app might be ahead of its time, especially for small businesses.

By Jonathan Blum

Opinions expressed by Entrepreneur contributors are their own.

Is Google Wallet the Next Step in Mobile Payments?When it comes to reinventing the way people pay for goods and services, Google is ahead of the pack with its Google Wallet Android application, available on the Sprint Nexus S 4G phone. It allows users to transfer money directly to merchants using a smartphone app that runs on devices that are enabled to accept "contactless" payments.

While other, similar systems -- such as Exxon and Mobil's Speedpass program -- exist, Google Wallet is the first major deployment of the technology with wider retail functionality. And although the service is still largely in the roll-out phase, and it isn't perfect, it does offer some tantalizing possibilities for businesses considering the future of mobile commerce.

What is it: Google Wallet lets consumers to pay for goods and services by using virtual credit card information stored on a smartphone that communicates wirelessly with a nearby payment terminal. The transaction works by tapping a smartphone against a special reader -- for now, MasterCard PayPass -- that merchants install at their point-of-sale terminals.

Google Wallet doesn't change the relationship between small businesses and their financial institutions any more than an old-fashioned leather wallet. It's just an intermediary. A transaction processed using Google Wallet still goes through the traditional route including banks and credit card companies.

There are no added fees for accepting Google Wallet payments, but merchants will still pay the same credit card company transaction fees.

What you might like: It's an interesting new way to accept payments that fits the way smartphone-tethered consumers live their lives. Google Wallet also opens up promotional opportunities. Consumers will be able to use their phones to redeem "Google Offers" -- Google's version of daily deals. Small businesses will be able to offer customers digital loyalty cards through the app.

What you might not like: Google Wallet is still in the early stages of deployment. For now, the only virtual credit cards supported are a Citibank MasterCard or a Google Prepaid card, although users can add money to a Google Prepaid card using any credit card.

A business also needs the infrastructure in place to accept payments. That requires upgrading your point-of-sale with a MasterCard PayPass terminal, with varying cost.

The app is only available on the Sprint Nexus S 4G right now. So, presumably a fraction of your customers will be immediately able to use the service.

Bottom line: Google Wallet is a lot like many things Google does: It's a marvelous idea that is a step or two ahead of its time. For businesses that serve a niche market, with dedicated smartphone-using customers, there could be near-term upside in supporting the technology.

Jonathan Blum is a freelance writer and the principal of Blumsday LLC, a Web-based content company specializing in technology news.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

You Have One Month Left to Buy a House, According to Barbara Corcoran. Here's Why.

"If you are planning on waiting a year and seeing where interest rates go, you are out of your mind," Corcoran said.

Business News

These 3 Side Hustles Make the Most Money While Working Fewer Hours, According to a New Survey

The survey also found that having a side hustle doubled as a path to becoming more employable.

Franchise

The McRib Is Back, But Only at Select McDonald's — Here's Where to Find It

This scarcity is nothing new. In 2022, McDonald's announced a "Farewell Tour" for the McRib, suggesting that it might be the last time customers could get their hands on it.

Side Hustle

I Made $14,000 in 1 Week With a Spontaneous Halloween Costume Side Hustle — Here's How

Sabba Keynejad was in art school when he started to refine his entrepreneurial skills.

Social Media

How To Start a Youtube Channel: Step-by-Step Guide

YouTube can be a valuable way to grow your audience. If you're ready to create content, read more about starting a business YouTube Channel.

Business News

This Is the Goal-Setting Method Shohei Ohtani Learned in High School That Helped Get Him to the World Series

The MLB superstar's success did not come as a surprise to him. He had a plan.