Google Patents GPay for Paying on the Go
September 3, 2007 at 11:16 pm by Ehab Bandar
On the heals of the recent buzz surrounding the GPhone, a new patent published on August 30th describes how Google is developing a mobile payment system to send money by SMS.
The patent describes several scenarios and features for sending money to people, vending machines and offline retailers, such as Target and Starbucks. Here’s a summary of how it works (see diagrams below from the original patent):
- Both sender and receiver must be registered users.
- Sender sends SMS with payment and recipient info.
- Google payment system parses the SMS for payment information and checks for fund availability, sending rules (such as maximums), ‘fraud score’, and in some cases, puts the money in escrow for additional processing.
- The payment system then debits the sender’s account and credits the recipient’s account.
- Google notifies recipient of payment.
Although this technology is nothing new — both PayPal and Obopay do it today — it has not really taken off. For banks, this means another player is seeking to own how payments are made between people and businesses.
Today, the choices for sending money to others are quite limited. Apart from cash, options to send money consist of personal check, ACH transfer, or PayPal. But none of these are great for paying on the go. If both GPhone and GPay are on the horizon, we could be seeing a new way to make payments. Imagine picking up your phone, choosing ‘Pay’ from the menu, and then selecting a recipient and amount to send. That’s in essence what Google is trying to do. To combat fraud and security, the patent introduces various mechanisms such as a transaction’s “fraud score” to setting transaction limits, verifying devices and holding transactions in escrow for additional processing.
Who Would Use this?
A better question perhaps is who would want to receive money this way? Given the number of payment options available, the payment instrument one uses is primarily driven by recipient preference. It’s the equivalent of putting a sign that says “Visa Accepted Here.” The choice for the sender then becomes what’s more convenient for me to use: Cash, Check, Credit Card, or GPay?
I can still remember back when Email was just catching on and trying to decide whether to send a message to someone by Email, phone, a letter or in person. Initially, the answer typically varied by circumstance, type of message, and recipient preference. Over time, email became the clear winner through sheer convenience and ubiquity. The notion that you could NOT use Email for something seems implausible today. I think the same analogy could be drawn to the growth pattern for sending money by SMS. It’s a function ripe for adoption, with technology, need, and convenience merging to provide the perfect opportunity.
In the late 90’s, I attended a speech by Jeff Bezos, in which he explained the success of Amazon.com. In short, he said the circumstances were such that it simply needed someone to put it all together:
- The infrastructure for shipping products from warehouse to consumer was in place
- The Internet was alive and well
- E-commerce technology was improving
- More books were being published than could be stored in any one store
It then became a question of building the best possible customer experience to attract consumers. Whoever nailed that would be the winner.
For mobile payments, the answer lies somewhere between providing a secure and reliable payment method to recipients willing to accept money this way. With Google seeking to build an independent payment system and investing millions in mobile technology, my next cafe latte could very well be tinged with SMS.
Here are some interesting diagrams from the Patent:
(No Ratings Yet)
Loading ...Share: 
