Google wants to be your wallet

Cash is dead and credit cards are dying. Your new wallet is your smart phone. Get ready for a world where every transaction will be traceable.

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Attendees watch a demonstration of the Google wallet application screen during a news conference unveiling the mobile payment system.

Source: REUTERS/Shannon Stapleton

Like it or not, your smart phone is turning into your wallet. And if Google has anything to say about it, you’ll be spending gDollars on your gPhones.

Today, to the surprise of practically no one, Google announced Google Wallet, a mobile payments system using the Near Field Communications technology built into certain Android smart phones.

Soon you may be able to wander into your nearby Quickie Mart and wave your Android phone at the register to pay for that six pack of Modelo Especial and bag of Doritos Cool Ranch chips.

For now, though, the “tap-to-pay” system is taking baby steps. Google Wallet will only be available as a trial in New York and San Francisco, and will work only on Samsung Nexus S 4G phones at select retailers using MasterCard PayPass terminals.

But it’s inevitable. Everyone in the financial sector is working on frictionless forms of commerce, and the smart phone is the logical place to put them. You might as well mark today as the day cash died and traditional credit cards went on life support.

[ See also: My application to become a Facebook ambassador. ]

Why? Two reasons. One is that bits are much cheaper than molecules and easier to upgrade or replace. No cards to mail out, no postage, etc.  So banks will be able to charge the same transactions fees while incurring much lower overhead. The second is the wealth of data that gets generated when you purchase something, much of which goes uncaptured or poorly used. Everybody wants at that, especially Google.

Let’s think about that purchase of Modelo and Doritos. Today, that is probably a straight cash transaction only you and the slacker behind the counter know about, and he’s probably too stoned to remember.

If you bought that with your smart phone, a whole mess of people will be able to remember it.

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