Mad Dog 21/21: Google Evildoers Filched Funds From My Wallet
January 21, 2013 Hesh Wiener
Late last year, Google said its Wallet mobile payment system had completed its larval stage. Google was going to phase out the special debit card used for the launch. The emerging adult Wallet could hold virtual versions of any debit or credit cards the user chose. These cards were wrapped in security and wired into a robust services framework. Wallet looked like another well executed Google launch.
But that was before the letters started showing up, the ones talking about a lost or stolen MasterCard the Wallet user had never heard of.
The letters came from MetaBank Everywhere Reward Cardholder Services, which, the fine print at the bottom indicates, is part of First Data Corporation, one of the largest payment processing and financial services conglomerates in the world.
About 20 years ago, First Data went public. Just before that it was owned by American Express. The company had a voracious appetite and from time to time it would disgorge a property it had eaten, such as Western Union, which became independent in 2006. The following year, 2007, First Data was itself swallowed by private equity giant Kohlberg Kravis Roberts. KKR still owns First Data and that makes it difficult for outsiders to see the company’s workings. Nevertheless, the financial process used to take First Data private was vast. It included taking on $24 billion in debt, a burden so consequential that First Data remains obliged to disclose aspects of its financial situation that a fully private takeover would have avoided.
The point is that First Data is major league. So, anyone getting a letter from First Data (or any of the companies it owns) that starts, “Recently, you reported your Everywhere Reward MasterCard lost or stolen” is bound to pay attention. Moreover, the letter was sent by the card’s issuing firm, MetaBank, and more specifically and confusingly, from this department, person or function in the bank: IRR Cream.
The finest print on the letter said the MasterCard glued to the letter was non-reloadable, nor did it have cash access. Whatever it was worth couldn’t be increased. Whatever it was worth couldn’t be turned into real money. The Everywhere Reward card was also restricted so it could not be used everywhere. In fact it was not possible to use this card to buy anything anywhere outside the USA. There’s more, if you really want to know.
Most (maybe even all) of the people who got this letter didn’t puzzle out the source of the card and its introductory letter, even though some recipients had previously been told to expect a debit card of some kind by the ultimate source of the instrument, Google.
What Google had intended to close down was a special debit card operation it had started in conjunction with an Android app called Google Wallet. Wallet is a secure payment system that uses the NFC (Near Field Communication) chip in certain smartphones and its related security circuit to provide a payment mechanism that is conceptually similar to the service provided by an ordinary credit or debit card with a magnetic stripe. The Wallet is electronically active but it is compatible with a passive smart chip that can also be used as a payment device, a smart chip like the kind found in Citibank ThankYou MasterCards and other plastics. ThankYou cards are an implantation of MasterCard’s payment technology backed by Citibank and others called PayPass.
The chip in a PayPass card (or other payment gadget) is actually a whole system powered by the point-of-sale receiver. It turns radio energy into electrical power it can use, wakes up its data receiver, runs its little transmitter and executes software that goes through a friend-or-foe dialog that, when all is well, ends with a point-of-sale terminal initiating a payment transaction. This all happens so fast it appears to be instantaneous.
ThankYou and other PayPass cards use a tap on a receiver surface instead of a swipe to signal an intention to pay. (Citibank also offers a very compact version of its payment chip that can be tucked into the case of any smartphone or put on a keychain and tapped on receivers more or less that way whole ThankYou cards can.)
Google Wallet does away with the card and its miniature chip carrier alternative and instead starts a payment transaction using a dialog format that is a more sophisticated version of the one baked into a ThankYou or other PayPass smartcard. For instance, Wallet doesn’t just let you pay with one kind of card. Instead, it lets you choose from a whole collection of credit or debit cards, just the way it goes with a conventional wallet that has some cards in it.
Right from the beginning, Wallet was able to contain more than one card. Initially, only Citibank was willing to play ball with Google, so to show Wallet’s versatility, Google supplemented the option of using a Citibank ThankYou card with a debit card of its own. Developers and other early users of Wallet were not only given a debit card, they were given ten bucks value in the card to get things rolling.
Adding a ThankYou card was done by the user in conjunction with Citibank. The Wallet user had to contact Citibank, which could be done by phone, and apply for a ThankYou Card (including not only the account for use with wallet but a plastic card and in addition a chip in a carrier that could transform any phone into a payment phone). Citibank has a pretty streamlined card application system and made it as easy as possible for any creditworthy party to get on the ThankYou bandwagon, receive a card and then go through the very simple procedure that adds the card to a Google Wallet.
Google kept its Wallet in step with PayPass technology right from the beginning and still does. And while most of the talk about Wallet in the USA concerned Google’s ambitions, Citibank’s tactics and the prospects of rival mobile payment systems, such as the one called Isis that various mobile carriers keep saying is about to become the next big thing, Google and Citibank had a much larger strategic vision.
While most people have still never heard about Google Wallet, visitors to last summer’s London Olympics found that they could pay for quite a few things with either a Wallet-equipped smartphone or a Citibank ThankYou card or any other PayPass card or smart chip carrier.
To keep things in context, London remains the NFC capital of the world, at least until Disneyland around the globe gets its mobile ID technology fully in place. Public transit in London is based on an NFC devices called OysterCard that are for all practical purposes smart tap-to-use debit cards confined to buses and trains. Oyster, so far, won’t take payment from PayPass, although with a little bit of fresh software it probably could. Similarly, smartphones with NFC radios in their collection of circuits could certainly be integrated into Oyster.
Nevertheless, despite the turf wars among NFC system operators, London was payment paradise last summer and the results have lingered on. At least one of Starbucks’ rivals in the UK has NFC payment in most every one of its shops and, with coffee as good as the more famous chain, comparable free WiFi, plus a more convenient payment system, Café Nero managed to pick up a little extra trade from American tourists and others packing Wallet or PayPass during the past several months.
By the end of 2012, as Google upgraded its Wallet service to enable the addition of just about any credit or debit card it had to not only say but also show that it was going to serve rather than compete with various outfits in the credit and debit instrument business. By the time it was writing to all its pioneer users to say that the Google Debit Card used to launch Wallet was going away, it had made its smartphone app a home from home for every card in the USA and quite a few elsewhere.
Users who have a Wallet-equipped phone notice payment terminals are cropping up everywhere. Most recently I personally observed NFC payment technology (for Wallet and PayPass among others) in settings as diverse as taxicabs in Fort Lauderdale and New York City, Duane Reade drug stores in Brooklyn, and the checkout tills at Wegman’s not-merely-admired-but-revered supermarkets in central New York State.
One would think that companies like Google and First Data, working together, could seamlessly hand off a bunch of experimental debit cards (we’re talking mere thousands here, not millions) and tell the cardholders that their money, formerly in the Google Card, was not safely in the Successor Card. One would be wrong.
Not only did Google and its partner manage to send a completely nutty letter (written for another purpose in 2011, according to its copyright statement) to people who helped Wallet come to life, but they actually threw a good scare into some of the recipients. The letter apparently made some recipients wonder if somebody had put their name and address on a credit application for this goofy MasterCard, the one that the letter said had gotten lost and was now being replaced. Postings on Internet chat boards demonstrated just how unsettling credit events can be. One person apparently spent 20 bucks for a credit check to make sure the letter wasn’t evidence of some kind of fiscal mischief.
Wallet pioneers who wanted to talk to the Everywhere Reward people to get a better understanding of their situation could probably do so, but on the card’s website there is a nasty FAQ page that says every question by phone would cost the caller a couple bucks. And that’s just one example. The card sent out to replace the Google Debit card seems to have charges for just about everything. If the clock ticks and the card has been inactive, there’s a charge for that, too. If First Data’s lawyers had figured out a way to charge cardholders for farting at a chili festival, they’d have done so.
In the case of one recipient of the MetaBank letter and its accompanying card, the sum in question, $11.71, $10.00 of which was contributed by Google, will eventually dwindle. The cardholder cannot just ask for the cash; that’s against the rules. So the cardholder has grudgingly concluded that it would be easier to just let the thing be until First Data sucked it dry a couple bucks at a time.
Neither Google nor First Data ever wrote to the Wallet pioneers who received the nutty letters and the cards with obnoxious rules to make amends for the confusion and occasional dose of anxiety they caused.
So it is no wonder that the holder of a sublimating MetaBank Everywhere Rewards (nee Google) debit card feels Google and First Data were, in this case, completely devoid of conscience, and that maybe Google’s motto ought to be: Do No Evil Except Maybe If It’s Under Twelve Bucks And The Victim Is Helpless.