Google Wallet will allow its users to leave their house without the worry of forgetting their wallets as their phone will take its place. The mobile app uses a chip in the phone so it can be waved in front of payment stations to buy things. Users set it up by registering a credit card to the phone or loading a Google Prepaid Card with a credit card. Along with this a four digit password will be required for the user to be able to make the digital transactions.
Google Wallet works only with phones with an NFC (near field communication) chip, which allows secure digital transactions over a short distance. So unfortunately, the only phone that people will be able to use the Google Wallet with would be the brand new Nexus S 4G although more phones are to be expected with this chip soon.
As of right now, the app is relatively new so paying with Google Wallet is possible only at stores that offer MasterCard PayPass. A MasterCard PayPass finder is built into the app and displays nearby locations where PayPass works. These can be viewed on a map, in a list or filtered by category. For now, only 150,000 merchants have the equipment in stores to use PayPass.
For now, Google Wallet is new but it is easy to see that digital wallets will be a lot more developed in the near future.