Why Is a Google Wallet Better Than a Wallet?

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Google announced a mobile payment strategy today that will allow consumers to pay for stuff by tapping their phones on a specific terminal at retailers.

Industry watchers have long expected phone platform providers like Google, Apple, and Nokia to get into the payments business, exploiting a set of wireless technologies known as near-field communication. NFC World has a great rundown of the big questions to ask about how the new payment system will be structured and how that will affect the current payments industry.

I can't help but wonder, though, if the biggest question remains unanswered: why would people use their phones to pay for things if they have perfectly acceptable alternatives already? Cash works. Credit cards work. Debit cards work. Online payments strike me as a space far more in need of innovation than retail, where, by definition, you're already standing in front of the payment machine.

This may be a case where the technology exists, so insurgent companies are looking for ways to use it to disrupt the incumbents. It seems to me that simply swapping out one form of easy payment for another isn't going to get Google very far in developed markets. Maybe Google Wallet could work in conjunction with "reward cards, coupons, tickets and transit passes" -- and that would be the combination that would sway consumers.

Still, count me among the skeptical. Out of the billions of people with cell phones in the world, something like 100 million people worldwide use some form of "contactless" payment, but only a few million here in the U.S., according to the analyst firm, Gartner. And it isn't really a technological problem, as NFC already works.

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Alexis C. Madrigal

Alexis Madrigal is a senior editor at The Atlantic, where he oversees the Technology channel. He's the author of Powering the Dream: The History and Promise of Green Technology. More

The New York Observer calls Madrigal "for all intents and purposes, the perfect modern reporter." He co-founded Longshot magazine, a high-speed media experiment that garnered attention from The New York Times, The Wall Street Journal, and the BBC. While at Wired.com, he built Wired Science into one of the most popular blogs in the world. The site was nominated for best magazine blog by the MPA and best science Web site in the 2009 Webby Awards. He also co-founded Haiti ReWired, a groundbreaking community dedicated to the discussion of technology, infrastructure, and the future of Haiti.

He's spoken at Stanford, CalTech, Berkeley, SXSW, E3, and the National Renewable Energy Laboratory, and his writing was anthologized in Best Technology Writing 2010 (Yale University Press).

Madrigal is a visiting scholar at the University of California at Berkeley's Office for the History of Science and Technology. Born in Mexico City, he grew up in the exurbs north of Portland, Oregon, and now lives in Oakland.

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