Google disabled use of prepaid cards for Google Wallet, as privacy concerns threaten the service’s chances in the competitive mobile payments field.
The Mountain View, Calif.-based company’s move comes in the wake of last week’s Wallet security breach, which exposed glitches that could allow unauthorized access to users’ accounts. The flaws let an unauthorized person access prepaid card balances by reconfiguring Google Wallet settings on an unlocked smartphone.
Mobile payments is a hotly competitive field with several entries poised to take off this year, including PayPal and the upcoming credit card- and carrier-backed service, Isis. The recent security hacks put Google Wallet’s reputation at risk, and if users perceive the service as insecure and unsafe as a result, Google’s service could lose ground against competing mobile payment options.
Google Wallet’s competitors are making security a top priority. PayPal recently challenged rivals with an in-store payment system that is undergoing a trial run in Home Depot stores and will expand to other major retailers later this year.
The service allows user to make payments with linked checking accounts or credit cards without sharing financial information, and doesn’t require use of prepaid cards to refill account balances, unlike Google Wallet.
Isis took steps to boost security late last year when it signed on digital security firm Gemalto to reinforce its platform by encrypting transactions and putting privacy protections on user data. Gemalto makes SIM cards and other devices, hinting Isis could build security directly into mobile phones’ SIM cards to ensure safety and security when it launches later this year.
In the meantime, Google Wallet just got a bit more inconvenient for users because they can no longer use a Google prepaid card to add money to their account. The inconvenience and security concerns could cause Google Wallet to lose points in users’ eyes at a time it can ill afford to do so.
The Google Wallet privacy issues come just as the company works to reassure users its upcoming privacy changes are a benefit, not a drawback, and could damage the company’s reputation, ultimately harming its relationships with retailers and advertisers.
For now, Google Wallet users are primarily responsible for protecting their personal information, and must lock down phones with passwords and keep their mobile device close so it doesn’t fall into the wrong hands.
Google’s decision to disable prepaid cards is a temporary stopgap measure until the company can find a permanent solution, vice president for Google Wallet and Payments, Osama Bedier, wrote in a blog Saturday. If Google can’t find a way to secure its Wallet service before rivals can gain, it could lose out in the highly competitive mobile payments field.