Paul Conley, Editorial Director at financial services comparison website MyBankTracker.com, said the mobile wallet space is still in its infancy, with no clear leader. According to Conley, the three major players vying for mobile wallet supremacy are Google Wallet, Isis and MasterCard Worldwide's PayPass.
"Everybody has an advantage here," he said. "With Isis it's got to be the merchants. With Google I think it has to be Google's brand name in the mobile space. … And PayPass, the power there has to be MasterCard itself, and the branding power MasterCard has put behind other initiatives. So they're all bringing some pretty serious weaponry to this fight."
Todd Ablowitz, President of payment consultancy Double Diamond Group LLC, believes it is too early in the mobile NFC space to even score Google's offering. "The ecosystem is still forming," he said. "You don't have enough phones with NFC on them, enough merchants with readers yet to really know how well they're doing."
In March 2012, it was reported Google was considering making changes to Google Wallet to boost consumer adoption. Even if the wallet is not growing as fast as Google expected, it is hard to find fault with it. Ablowitz said Google Wallet is now available on several phones, but still only through one mobile carrier – Sprint Nextel Corp. "It's easy to jump to a conclusion about their success or lack thereof, but I think we're looking at a foundational period," he said.
Google Wallet debuted in May 2011 with a New York press conference that brought together Google's venture partners – payment processor First Data Corp., card issuer Citibank N.A. and Sprint. The next day, eBay Inc. subsidiary and alternative payment provider PayPal Inc. sued Google, alleging that the search engine giant stole trade secrets when it hired Osama Bedier and Stephanie Tilenius away from PayPal.
With Bedier now leading the mobile wallet venture, the first version of Google Wallet was rolled out on Nexus S 4G smart phones in September 2011. The wallet supported the Google Prepaid Card and a MasterCard Worldwide-branded Citi credit card. By that time, one of Google's chief rivals in mobile NFC payments, Isis, was off and running with backing from the three largest U.S. mobile telecoms, AT&T Mobility, T-Mobile USA and Verizon Wireless.
Fast forward to February 2012, when security researchers disclosed a security flaw in Google Wallet that could have allowed hackers access to Google Prepaid Card accounts resident on the phones. Google quickly issued a fix to the problem.
In late May, another apparent flaw was discovered in Android-based smart phones preloaded with Google Wallet, but it didn't concern security. It was reported that when the phones were reset at factories to clear up glitches that arose from downloaded apps, the phones' mobile wallet functionality was disabled.
As of this writing, Google Wallet is available on seven phone models and is accepted by 25 national retailers, including The Gap Inc. In total, Google Wallet is accepted at over 140,000 U.S. merchants that use POS devices enabled with MasterCard's PayPass technology, according to Google spokesman Nate Tyler.
First Data, which functions as trusted service manager for Google Wallet, facilitates the over-the-air provisioning of new card accounts onto the virtual wallet. Jeff Johnson, Senior Vice President and Division Manager of Prepaid Solutions at First Data, said Google Wallet is an example of the risks and rewards of taking a leadership position in new and untested waters.
"We've seen significant take-up on [Google Wallet]," Johnson said. "I think Google probably had more expectations. We did, too. But it was a leap of faith by both companies. I think from an industry perspective, too, we're the first ones out there. … And I think it was the first step by two large companies to get that ball rolling."
Conley pointed out that even though innovation is embedded in Google's culture, the company is not afraid to terminate development on programs. Conley gave two examples – Google Wave, a real-time online communication tool, and GOOG-411, a free, nationwide 411 directory service. But such a fate does not seem to be in the cards for Google Wallet.
Ablowitz said Google has made it clear the importance of payments to the company, with Google Wallet among its top corporate initiatives.
Conley is hesitant to predict Google Wallet's ultimate success. But he cautioned against underestimating Google in mobile NFC payments. "Only a fool would doubt that company's ability to change an industry and alter how we live," he said.
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