According to Bloomberg, Verizon will allow Google Wallet to run on the flagship Android 4.0 device once it is able to find a balance between "the best security and user experience."
Google launched its Google Wallet service on the NFC-enabled Sprint Nexus S 4G earlier this fall. The Galaxy Nexus is the first Android handset on Verizon to use NFC and it was expected to use Google Wallet.
As Bloomberg notes, the ban on Google Wallet comes amidst increased competition in the mobile payment space. Verizon, AT&T and T-Mobile are all investing in a join-venture called Isis, which competes with Google Wallet in the NFC and mobile payment space.
In our previous conversations with various players in the mobile payments space -- including Google -- it was clear the authentication technology would be an important part of future payment partnerships.
Google has created its own Secure Element that works alongside devices and software stacks. Google's plan -- as the company told me in August -- is to make the Secure Element an accepted standard in the NFC space. It's this secure element that could potentially conflict with the security measures that Verizon and other Isis investors are planning to take.
A May NFC Times article highlighted some of the potential conflicts between Isis and Google. The key is that Google controls the Secure Element in its implementation and has "no plans to include mobile operators directly." This is at odds with the way Isis operators, including Verizon, want to work.
Verizon has since clarified in its own statement that it doesn't block applications. The reason Google Wallet isn't available in the Galaxy Nexus is because Verizon hasn't agreed to use the required Secure Element that Google uses as part of its NFC payment solution.
Whatever the reason, not having Google Wallet support on a flagship handset on the largest wireless carrier in the United States is a big blow for Google Wallet. The payment system already faces mobile wallet competition from PayPal, Visa and others.