Google And Verizon May Be Fighting Over Hardware, Not Mobile Wallets

Written by Frank Hayes
December 8th, 2011

Why won’t Verizon let users install Google Wallet on its soon-to-be-released Galaxy Nexus phone? It might be that Verizon is defending its ISIS partnership and the mobile wallet it will roll out sometime next year. But there’s a simpler explanation: Only one mobile wallet can control the NFC Secure Element that stores payment-card data. If that’s Google Wallet, then it can’t be ISIS or any mobile-payments scheme that Verizon controls directly.

And although there’s nothing to stop Verizon from adding the necessary hardware for lots of mobile wallets, that’s not likely to happen unless Google opens its own corporate wallet.

On Tuesday (Dec. 6), Verizon said Google Wallet won’t be built into its new phone and that Google’s mobile wallet app also won’t be available for download to the phone—even though the phone comes with a near-field communication (NFC) chip and Google Wallet is the only NFC-based system that’s currently used by any substantial number of U.S. retailers.

That led to a cascading series of statements from Verizon and Google—neither of which actually said very much—and much more ink spilled as everyone from bloggers to Bloomberg and The Wall Street Journal tried to parse the tight-lipped statements.

Actually, along the way Verizon spilled the beans about exactly why it wouldn’t let Google Wallet be installed on its phones. The statement was just so terse—and lacking any technical explanation—that few people understood it.

Here’s what Verizon said in a statement: “Google Wallet is different from other widely available M-Commerce services. Google Wallet does not simply access the operating system and basic hardware of our phones like thousands of other applications. Instead, in order to work as architected by Google, Google Wallet needs to be integrated into a new, secure and proprietary hardware element in our phones.”

That’s the NFC “Secure Element” (SE) that’s used by Google Wallet (and every other NFC-based payments system, including ISIS) to store encrypted payment-card data. It’s built into the Galaxy Nexus phone, and there’s no technical difficulty in Google Wallet grabbing control of the SE to secure the payment information it uses.

Here’s the problem: Only one mobile wallet can control an SE. It can allow other apps to use the SE to store information, but somebody’s got to be in charge. If Google Wallet controls the SE, then it can’t be controlled by ISIS or any mobile-payments scheme that Verizon controls directly.


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