What if My Phone Is Stolen?
Even if you trust wireless technology to keep your card data safe, you may have problems leaving that information on your phone. While a wallet can be lost as well, you usally keep that in your pocket unless you need to pay for something. Phones, however, are sometimes put down on a table or desk, making them easier to leave behind.
Google has thought of this, and keeps card data secure using a chip it's calling the Secure Element. It's an independent, encrypted chip inside your phone that is kept entirely seperate from the operating system and only accessible by authorized apps.
The idea of using a separate chip or specific portion of a chip to store certain data for security purposes is not unusual. Intel's recent purchase of McAfee in 2010 was conducted specifically for this reason. The company wanted to develop built-in, hardware based security features, not unlike the Secure Element that will be used in phones that support Google Wallet.
In addition to the chip, Google Wallet can be locked with a PIN. This provides protection against attempts to access card information through the Google Wallet app, and adds an additional layer of security besides the PIN or lock you might already use to protect against unauthorized access to your phone.
What if your phone doesn't have this security chip? It will. Google is not going to offer wireless payments on phones that do not have the Secure Element, which is why the technology will be rolling out on the Nexus S 4G, the only phone currently on the market which is designed for use with Google Wallet's tap-and-pay feature.