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Wednesday, September 28, 2011

Google Wallet rollout generates questions

In the epic fight between giant technology companies and huge telecom companies to capture the emerging near field communication (NFC)-based mobile payments market, heavyweight contender Google Inc. appears to have won the first round with the Sept. 19 release of Google Wallet, an NFC-based mobile payment application.

The fact that Google Wallet's NFC application was first to market, ahead of rivals ISIS Wallet and the Visa Inc. mobile wallet could prove advantageous to Google as it seeks to establish Google Wallet as the payment application of choice among consumers.

ISIS, the NFC mobile commerce application backed by AT&T Mobility Inc., T-Mobile USA Inc., and Verizon Wireless Communications Inc., is being tested in Texas. It is expected to launch in 2012.

While being first to market has advantages, analysts pointed out there are so many exceptions to what the Google technology promises, as opposed to what it delivers, that companies like ISIS and Visa developing mobile wallets may decide to delay launch of their products until they can see how to improve upon Google's model.

Current limitations

Google Wallet is only available on Sprint 4G phones that have NFC technology built in. The company said that eventually the application will be available free on any Android phone.

Initially, a Citibank Inc. MasterCard Worldwide credit card or a Google Prepaid card will be required to use Google Wallet. Visa, American Express Co. and Discover Financial Services have agreed to join the Google Wallet payment options, but there is no set timeline for these cards.

Visa stated it wants to be available for customers on all mobile payment options – regardless of which application, software or hardware is used. "This agreement builds on Visa's strategy of enabling consumers to make mobile payments with whatever device they choose using the trusted accounts they already have," Visa Global Head of Product Jim McCarthy said.

According to Visa, consumers will eventually be able to use Google Wallet on any Visa payWave terminal. Visa is developing a digital wallet in conjunction with major U.S. banks.

Stephanie Tilenius, Google Vice President of Commerce and Payments, said, "This agreement extends Google Wallet to Visa account holders worldwide. This is a crucial step towards realizing our shared vision for the future of mobile commerce."

Using Google Wallet

To use Google Wallet, consumers must load their credit, debit or prepaid card information into their phones and then tap in their phone number and PIN at the POS. MasterCard executives were quoted as saying mobile wallet payments still seem unnecessary to many Americans and may take five to 10 years to win acceptance.

Googlee Wallet can be used at POS terminals equipped with MasterCard PayPass technology – reportedly about 120,000 locations in the United States, and 300,000 locations globally out of the 32.7 million POS terminals deployed worldwide.

The list of retailers accepting Google Wallet payments includes Toys"R"Us, Jamba Juice Co., OfficeMax Inc., American Eagle Outfitters Co., Peet's Coffee & Tea Inc., Champs Sports, Coca-Cola Co., Jack in the Box Inc., Sunoco Inc., Sports Authority Inc., Radio Shack Corp. and Duane Reade.

Only Toys"R"Us, Jamba Juice and OfficeMax are equipped with Google Single Tap, a proprietary technology for sending promotional offers directly to Goodl Wallet users.

There was no mention from Google as to when other merchants will board the Google Wallet team or when other smart phone manufacturers will be enabled with the NFC chips necessary to use the application.

Push toward wider acceptance

Google is subsidizing Google Single Tap for qualifying merchants in an effort to gain broader acceptance of the technology. In a New York Times article published in February 2011, Google Executive Chairman Eric Schmidt said his company wants Google Wallet in local stores where there are a large group of advertisers and consumers who haven't yet had the chance to take advantage of mobile payment technology.

To achieve this goal, Google is waiving transaction fees and providing the Google Wallet application free to consumers. Google Wallet revenues will initially be generated by advertising to Google Wallet customers through Google AdWords (the company's advertising network) and Google Offers (a coupon service).

Google Vice President of Payments Osama Bedier said, "The world is on the brink of the next big shift in payments, and today's announcement demonstrates that we're making real progress in attaining the vision we share with our partners for a new and innovative mobile platforms platform. We believe this is just the beginning of a transformation that's soon to come." end of article

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