On April 14, 2014, the essential ‘Tap and Pay’ function in Google Wallet App stopped working on all smartphones that were not running its latest version of Android called ‘Kit Kat.’ On that day, Google Wallet deactivated many of its already scarce user population with no transition period. Why?

It has been more than 2 ½ years since the Google Wallet launched, yet Google Wallet can function properly on a maximum of about 7% of the smartphones in the United States because it relies on a security technology that is owned by the mobile network operators, and only one of these operators (Sprint) has agreed to work with Google Wallet. Verizon, AT&T have simply blocked Google Wallet from their networks. To make matters worse, the communication technology that is also relied on by Google Wallet is being blocked by Apple on all iPhones. With enemies like Verizon, AT&T, and Apple, how can Google Wallet possibly succeed? The answer lies in a technology that was created only three years ago in Austin, Texas.
Read this whitepaper to learn about this new technology, and how it may dramatically accelerate Google Wallet.
Table of Contents

Executive Summary
Introduction To The Predicate Industries
Smart Cards
Mobile Telecommunications
How the Mobile Operators Challenged Google
What is ISIS?
Apple Blocks Google, Isis, And Everyone
How Google is combating the problems?
Cloud-based payments
Physical card
P2P Payments
Apple App - No Payments
Common Items Between Google Wallet And Isis
Host Card Emulation Saves Google Wallet?
What is Host Card Emulation?
Summary and Conclusion

Tables and Figures

Figure 1: Worldwide Smartcard Sales
Figure 2: Example of Initiation of a Smartcard
Figure 3: Example Of Permission Request In Direct Method Of Authentication
Figure 4: Example of Access Granted by Authentication Server
Figure 5: Example of Challenge Question Authentication
Figure 6: Initialization of a SIM Card in a Mobile Phone Using the Secure Element
Figure 7: Authentication of a Mobile Phone Using a SIM Card
Figure 8: Multi-Factor Authentication in Voice and Text Data
Figure 10: How a TSM Functions
Figure 11: Mobile Network Operators and TSMs Involved in in Google Wallet 1.0 and 1.5
Figure 12: Market Share on Google Wallet 1.0 and 1.5 Mobile Operator Penetration
Figure 13: Diagram Of Isis Mobile Wallet Presented For Payment At POS
Figure 14: Diagram of Isis NFC case for iPhone 5SFigure 15: Apple iOS Market Share vs Android and Others in US, January 2014
Figure 16: Worldwide Apple iOS Market Share vs Android and Others, Calendar Year 2013
Figure 17: Photo of Physical Google Wallet Credit Card
Figure 18: Diagram of Actual Menu on the Google Wallet App on Apple’s iPhone 5S
Figure 19: Sample of Mail Insert sent to AmEX’s Serve Customers in January, 2014
Figure 20: Distribution Of Google Wallet Loyalty Programs by Industry

Based on primary research and data, Google Wallet 2.0 is essential for:

Mobile network operator executives
Financial and payment industry executives involved in mobile
Technology and platform providers
Innovators in mobile payments and mobile commerce
Merchants and representatives of merchant associations
Consumer association representatives
Regulator and government representatives involved in payments systems
Investors
Analysts and consultants