Turns out it's not necessary to decrypt the PIN, or even hack into Google's Wallet, just ask the phone nicely and it will let anyone root though its innards.
The flaw was spotted by The Smartphone Champ, and unlike yesterday's efforts which required root access and a modicum of brute force, this hack barely qualifies for the term, as it just involves asking the phone to reset the application data. That wipes the stored PIN, but not the card details, so a new PIN is entered and transactions immediately become possible:
Google has apparently responded with a statement, providing a phone number (855-492-5538) which you can call if planning to pass on the handset on to a friend, or in the event that your phone is stolen. Google will then disable the prepaid card to prevent the phone being used to pay for stuff with a tap on the till.
It's easy to imagine how this situation has come about, though harder to understand why Google didn't spot it earlier. The Android application manager allows one to clear app caches, wipe all data belonging to a specific application, as well as uninstalling the app, and we know that the Google Wallet app stores the user's PIN in a file so wiping the data wipes the PIN.
But the card details themselves aren't stored in the phone's filesystem, they're stored safely in the Secure Element, so they don't get wiped when the "application data" is removed.
Run the Google Wallet after removing its data and it assumes it is being run for the first time, and dutifully asks the user to create a PIN. Then ask it to add a prepaid card and it happily finds one already installed in the Secure Element and readies it for use.
None of this makes Google Wallet any less secure than a real wallet, in fact it remains slightly more secure, and it's typical of the teething problems one hits when implementing such a complicated architecture (involving banks, payment processors and various trusted third parties), but it is extremely embarrassing and risks the future of a technology which is already proving surprisingly hard to sell. ®