Google NFC Smartphones Come with IT Headaches

Wayne Rash
Google's announcement of a new mobile-payment system based on near field communications (NFC) technology promises to make buying stuff easier for consumers. The idea is that you'd use your smartphone to pay for your purchases by passing it over a terminal in much the same way that you can now tap RFID-equipped credit and debit cards to accomplish the same thing. Google promises that the security for the device will be airtight, and that hackers won't be able to steal credit card numbers just by being nearby when a transaction happens.

So far, so good. The way things are currently structured is that Google is partnering with Citibank MasterCard for payments, so customers would have to get one of those accounts, or they could get a prepaid Google card and use it to charge against other credit cards. Initially, this service is going to be offered only in New York and San Francisco and only on Nexus smartphones available through Sprint.

But just because this all appears easy and safe for consumers doesn't mean it's easy and safe for the businesses that accept these payment systems. First, a business that plans to accept the NFC payments is required to buy compatible terminals, which will cost a significant amount of money if you're not already using terminals with RFID readers. Second, you now have another class of data that may be covered by payment-card-industry (PCI) requirements and federal regulations, even if there's no actual card physically present, which means you'll need to make sure your systems are totally compliant.

And then you'll have to figure out what to do when the inevitable claim arises from a customer that their Google payment system phone was used by somebody else to buy something they said they didn't buy. Chances are that the bank will have you covered in this eventuality, but are you certain of that?

Next comes the real complexity. If the Google phone wallet seems to be working, it's a safe bet that other credit card companies and banks will want in on the deal. Will they be supported by Google's payment-card system? How will you handle sales when somebody tries to use their phone to make a payment and it's not supported by your system?

And then there's Isis, a competing NFC payment card system that's being supported by everyone else besides Google and Sprint. Will your payment card system accept both of these? If not, how much will all of that cost you?

You'll note that there are a lot more questions here than answers. That's because despite Google's best efforts, there aren't a lot of answers yet. But similar NFC payment systems have been in use successfully outside the U.S. for some time, and the businesses that accept them seem to be surviving. If the Google wallet system or other competing systems plan to make their approaches successful, they should probably see how those other systems worked and follow the example.

There's no question that Google's wallet NFC system can be a good idea, but it needs to be implemented so that it doesn't ask too much of the businesses that are on the other end of the transaction.

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