Google Wallet: A brewing battle between Verizon and Google

Turf war looms over a smartphone's secure element

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Verizon may be debating whether the Isis consortium could also use NXP's secure element, or whether Verizon and its Isis partners must find another secure element that can either replace NXP's or run alongside it. Verizon might want the software found on a secure element put on a SIM chip, which Google hasn't done. The question is whether Verizon wants to move forward in a mobile payment world where users can move between different payment networks as they do with texting networks, or whether Verizon and the Isis consortium believe they can create a big enough network that it won't need Google Wallet or whatever Apple technology comes up with to support mobile payments.

Hung said Verizon is looking out for itself. As he reads between the lines of the statements that Verizon has made in the past two days, Hung said Verizon is essentially saying, "We have plans to put in our own secure element that we control, and we don't want you, Google, to control it. Since you won't let us control Google Wallet with our own secure element, then by our definition, it's not secure."

While it is technically feasible to have more than one secure element in a smartphone, the user experience would not be optimal, Hung said. Given that, "Verizon is pushing the Isis wallet, so I don't think it'll push the Google Wallet ahead of the Isis wallet," he said.

So the battle is ultimately over who owns the mobile payment capability in a smartphone.

Jack Gold, an analyst at J. Gold Associates, said the Google-Verizon disagreement is rooted in Verizon's and other companies' still being in the early stages of formulating a mobile payments strategy. "Verizon's hesitation has to do with its focus on Isis, but also how they can get a piece of the action," he said.

Verizon also could be weighing what happens if Google Wallet is on a phone that Verizon sold and the device gets hacked. "Who does the consumer go after to get his money back -- Google or Verizon? I could see a big class-action product liability lawsuit coming," Gold said.

To Gold and others, the Verizon-Google dispute is another indication of how slowly mobile payments are rolling out in the U.S., partly because the U.S. consumer is already so accustomed to using a credit card instead of a phone for payments.

When Apple enters the fray, as expected in 2012 with an iPhone 5 that is NFC-ready, analysts expect that there will be even more competition and potential confusion. Get ready.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His e-mail address is mhamblen@computerworld.com.

Copyright © 2011 IDG Communications, Inc.

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