Google Wallet is getting over its reliance on a small set of Near Field Communication-equipped handsets with a new app that works on any phone running version 2.3 or higher of the Android mobile operating system.

Since launching its mobile wallet in 2011, Google has faced friction from banks, merchants and carriers. However, Google has demonstrated a willingness to revise its product to appease these audiences, and the latest revision may overcome carrier resistance by downplaying NFC, which  has long been one of Google Wallet's central features.

The new app is the latest of many major revisions to Google Wallet. Earlier updates fixed security holes, eliminated a virtual prepaid card account and changed the company's approach to bank partnerships.

"While many industry experts describe Google Wallet as a faltering initiative, Google continues to make strides to make its service appeal to a broader customer- and partner-base while removing previous barriers to adoption caused by the slow proliferation of NFC technology," says Arkady Fridman, a senior analyst for Aite Group. "This new approach without NFC may also allow Google Wallet to infiltrate the walled gardens of Verizon, AT&T and T-Mobile."

AT&T, Verizon and T-Mobile have long prohibited putting Google Wallet on their handsets, citing security issues related to how Google accesses the phone's secure element. These three carriers are also behind the competing Isis mobile wallet, which also relies on NFC.

The new Google Wallet focuses instead on a feature introduced in May to Gmail users. The app, just like Google's Gmail interface, allows users to send funds to a recipient on their address list.

"It's another indication that Google wallet is re-focusing its attention on e-commerce, P2P, and other payment use cases," says Zil Bareisis, a senior analyst with Celent's banking group.

The new Google Wallet will be available on all smartphones running "Gingerbread" Android or higher. Gingerbread, or version 2.3, was released in late 2010; the current generation of Android smartphones runs the "Jelly Bean" flavor of Android, versions 4.1 through 4.3.

"The updated app helps you easily send money on the go, store all your loyalty cards, save money through offers, and view all your Google Wallet activity—all in one place," wrote Peter Hazlehurst, director of product management for Google Wallet, in a blog post.

Google did not provide an executive for an interview by press time, though it said its Wallet expansion is not connected to Google's  recent acquisition of Bump Technologies, a company that allows information to transfer between mobile phones by bumping them together.

Google's extension of its mobile wallet to a wide range of Android devices accelerates its attempt to move beyond NFC payments to ancillary services to entice consumers and merchants. Google is not abandoning NFC — it still plans to expand the number of NFC phones beyond the 29 that work with Google Wallet today on specific carriers.

"While Sprint was the original and the largest mobile network operator partner, Google Wallet has since rolled out to a number of smaller networks, including Virgin Mobile, US Cellular and Metro PCI, so technically it was available to more than one operator, just not the three large giants behind Isis," Bareisis says. "The new app doesn't change that. If you want to use NFC payments at the point of sale, it will still only work with selected handsets on Sprint and those other mobile network operator partners."

Google would not say whether its new approach opens the door to an iPhone version. However, Google spokesperson Winnie King says the company wants to "bring Google Wallet to all smartphone users, and we're working to do that as soon as possible."

In downplaying a central feature to spur adoption, Google is following the same path PayPal chose in expanding at the point of sale. PayPal initially emphasized a feature that lets shoppers make payments by typing a phone number at the point of sale instead of swiping a card. However, to speed up its deployment, PayPal is expanding to a number of merchants that can only accept PayPal payments through the use of a card.

By emphasizing P2P in the new Google Wallet, Google is going head-to-head with PayPal, BrainTree's Venmo , Fiserv's Popmoney and the mega-banks' clearXchange.

By touting the transfer business, Google Wallet is pursuing a small part of the overall digital payments market, says Richard Crone, a payments consultant.  

"Person to person is a tiny market," says Crone, estimating the P2P market is about $1.2 billion, as opposed to the physical point of sale market which Crone's company estimates to be about $6.2 trillion. "Person to person is a fatal distraction."

Google is also emphasizing the use of mobile offers. Consumers can access offers from the Google Wallet, Google Search, Google+ or Google Offers apps. "[The offers] are visible and redeemable in your Wallet app at checkout. And later this week, you'll also be able to save offers on select merchant and couponing sites such as Valpak," Hazlehurst wrote in his blog post.

Users can add loyalty cards to the wallet by scanning bar codes or entering card numbers, and use loyalty cards by scanning the cards at checkout. An update last month moved Google Wallet away from its reliance on NFC to redeem loyalty offers.

"The significant shifts here are the expansion of the universe of available offers and the fact that you don't need NFC and tapping to get them redeemed, both of which could be important catalysts for increased usage of the wallet," Bareisis says.

Users can also join programs from Alaska Airlines, Belly and Red Mango via an integration with the Google Wallet app.

"For these merchants, you can view your loyalty status, rewards point balance and in the coming days, Google Now will notify you when you have a saved loyalty program nearby," Hazlehurst wrote. Other programs, including Avis Car Rental, BJ's Restaurants, Cosi, Hard Rock International, InterContinental Hotels Group, Marriott International, Raley's, and The Body Shop, will soon be added, Hazlehurst wrote.

Google Wallet has also enabled Koupon Media's digital campaign management platform, which allows brands and retailers to create, deploy and measure coupons and offers in Google Wallet through Koupon's platform as well as mobile apps, text messages, Facebook, Twitter and other channels.

"Not only do customers want digital offers, ultimately getting rid of the paper and plastic cards that stack up too fast, they also want their smartphones to manage these offers automatically," said TJ Person, Koupon Media's founder and CEO, in a Sept. 17 press release.

Google Wallet's moves around merchant offers are designed to arm Google with actionable consumer intelligence data, Crone says. "They are trying to offer features and functions that will provide Google with data to make their competitive ads and offers businesses more valuable to merchant brands and consumers," he says. 

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