Google Wallet Accepts All Cards, But Will Retailers Come?

Google last week announced two significant updates for Google Wallet. The 11-month-old service that allows customers to make purchases with their Android phones now works with all major credit cards. Those cards will be stored and managed in the cloud.

The previous version of Wallet could use only one credit card and stored the data on the device. The few who tried Google Wallet when it was first released could only link it to a Citibank MasterCard account. Now customers can choose Visa, MasterCard, American Express, and Discover accounts when making an in-store or online purchase.

The latest version of Wallet also lets users who lose their phone to remotely disable their wallet app with any browser. The app is free in Google Play and currently runs on six phones plus the Nexus 7 tablet. Wallet now works on the Virgin Mobile network as well as Sprint. Some users have reported running it on their Verizon Galaxy Nexus phones.

Verizon fought Google Wallet partly because it was in the process of developing ISIS Mobile Wallet, an RFID payment platform that it is currently beta testing in selected U.S. cities. Verizon is also testing with Aeropostale, Coca-Cola, Foot Locker, Jamba Juice, and Macy's, along with grocery stores and convenience stores.

Though Google originally said it would share the technology with RIM, Apple, and Microsoft, it offered no followup on its blog about expanding the platform beyond Android.

However, now that the infrastructure is in place, it seems that Google's partnerships that are not. Although it was part of Google's announcement, an American Express exec told Chris Velazco at TechCrunch, "Right now, American Express does not have an agreement with Google for our cards to be used in the Google mobile wallet."

Still, American Express is permitting the use of its customer accounts on Google Wallet. Why?

The cloud. In a year that Linkedin, Yahoo, and Dropbox were hacked, any claims by Google or anyone that it can guarantee data security need to be vetted in the real world. So the credit card giant could be hedging its bet on Wallet. If the service proves to be unsafe, American Express could claim that's why it never reached an agreement with Google. But if Wallet is as bulletproof as advertised, American Express will endorse it with an agreement. Google only says the payment cards are stored on "highly secure Google servers."

Google lost an opportunity to announce additions to its list of national retail partners, which currently is small enough to include them all here: American Eagle Outfitters, Guess, Bloomingdales, Foot Locker, Jamba Juice, Macy's, RadioShack, Subway, The Container Store, Toys "R" Us, and Walgreens. Any other retail transactions from Google Wallet depend on MasterCard's well-established Paypass system which is accepted in "hundreds of thousands" of stores around the world.

Google Wallet's chief rival, PayPal's Digital Wallet, added 15 new national retailers in May. A few such as Jamba Juice and American Eagle Outfitters overlap with Google Wallet. These retailers all have a presence in U.S. malls, which might be part of Google's and other providers' strategy.

The national retail chains such as Bloomingdales, Guess, Foot Locker, RadioShack, and Jamba Juice, demonstrate the value Google and its rivals place on malls as the first battleground for product dominance. It makes sense. Changing the spending methods of culture from swiping credit cards to tapping a cell phone in front of the clerk might seem a difficult task, but Google has picked malls, a popular hangout for teens, and teens would be the most willing to try a virtual wallet because they are not yet as entrenched as their parents in old ways of paying with a dumb wallet.