Thursday, December 8, 2011

Verizon Blocking of Google Wallet Likely About Control of Credentials Loading

The decision by Verizon Wireless not to support Google Wallet natively when Verizon begins selling the Galaxy Nexus smart phone in December 2011 illustrates in a couple of ways how decisions about "mere" technology choices can have important business implications.

Verizon Wireless, which owns a significant portion of Isis, a competing mobile wallet system, has clear enough reasons for not wanting to help a competitor gain an advantage, at a time when Isis is not yet been formally launched.

Verizon Wallet says Google Wallet, unlike most apps, "needs to be integrated into a new, secure and proprietary hardware element in our phones." That almost certainly means that Verizon Wireless, as do most mobile service providers who have thought about the matter, want to maintain control over the wallet credentials process by embedding the loading of user authentication information into the subscriber information module (SIM), that a mobile operator controls.

Handset suppliers would prefer an approach that puts the credentials loading process into a new, and separate, element that is not under the control of service providers, again with an eye to avoiding carrier control of the process. At least for the moment, it appears Verizon is going to get its way, at least in terms of maintaining wallet credentials loading through the SIM.

The Google Nexus that works on GSM networks has the NFC chip embedded in the battery, and Verizon might want to have the NFC chip in the SIM card. Others have argued for creating a new micro-SD card that would be the locus for credentials loading. 

Putting the credentials loading into the battery-based element means a user could switch carriers and retain the use of the app. So does the micro-SD approach. Where can the credentials loading occur? 

Since users must get new SIMs when they switch service providers, you can see why there is more potential leverage for a mobile service provider if the credentials management process is in an element controlled by the retail service provider. 

Obviously it should be possible to use the Android Market to allow users to download Google Wallet. One suspects that option will occur at some point, though one also suspects Verizon Wireless might try and extract some concessions from Google to support that capability. Whether payments by Google to use the features of the SIM could be among those business details is unknown.

But Verizon says it is "continuing our commercial discussions with Google on this issue. Verizon Blocks Google Wallet

How mobile payment and mobile wallet credentials get loaded onto a user's phone is way too much "in the weeds" for users to worry about. But the resolution of the question could have significant revenue implications for service providers and wallet providers alike. 

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