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Google Wallet?

January 5th, 2012

I received a great question the other day from one of our clients, and it really got me thinking. Here was the question:


We are interested in accepting payments via Google Wallet. I know it is early in the game and I understand that First Data is involved. Are you guys involved in any way? Can you be?

 

The quick and easy answer is no. We are not involved, nor is anyone outside of First Data, CitiBank, and MasterCard… yet.

As this technology continues to develop and become more ubiquitous it will find its way to us, and you. For now, players in the game are basically letting the big technology companies work out the kinks and see how this plays out.

There are other hats in the ring including Isis, PayPal, and Apple, but this payment scenario (along with smart card chips, PayPass, and many  other trials over the years) presents a serious “chicken and egg” problem: merchants won’t implement the technology until customers demand it and customers won’t ask if there is no way to use it.

Plus, these numerous players make universal adoption a challenge. Until there is a “standard” across the platforms (universal NFC readers, ALL phones with the technology, ALL banks and ALL accounts on board), it’s too difficult to dominate the market place. Are you going to have a Google wallet reader, magnetic stripe reader, PayPal wallet reader, and Apple Wallet reader, plus a reader for whatever other company is in the game? These readers are connected to software that has to communicate with a host for approval at some point as well. I feel that until these competitors adopt some sort of standard and go from there, they are likely to weaken themselves by trying to dominate the market.

This is why the current system works so well: all banks issue magnetic stripe cards that all readers can read and all processors link up with and support.

This all sounds exciting and it is, but “techiness” alone will not drive widespread adoption. Phone-based NFC has to solve a problem (too many cards to carry, identity theft, convenience, etc.) and right now it’s creating more questions than answers. Ask around and see how many people are comfortable with the idea of all of their money being tied to their phone. You will see there is still a high level of suspicion, justified or not.

Besides, this technology has existed for some time and still does not have widespread adoption. Ever hear of PayPass? It’s the same idea only much simpler. It’s just a fob that ANYBODY can use (if they wanted to) without a special phone or app. And this article was from January 2008 when MasterCard had its own wallet before Google… which never went anywhere. http://www.mobilemarketer.com/cms/news/banking-payments/434.html (note the predictions for “somewhere between 8 million and 30 million customers in North America will be using NFC-based contactless payments by 2012″)

Are there changes on the horizon and are we going to phase away from the magnetic stripe? Yes. Is Google Wallet going to be THE payment method? Not entirely likely. Finding the right matrix of card issuers, financial institutions, sales channels, technology companies, willing consumers, and participating merchants is some time off.

I think Google Wallet is a fantastic concept, and if you decide to check it out for your stores, I would love to see it working in action. I know it all has to begin somewhere, but consider the effort in setup and implementation versus the amount of customers actually likely to use it: an Android user (does not work on iPhones) that has a Samsungs Nexus 4G (no other phones work as of now) with a Citi MasterCard account (no other banks or cards work as of now) that has downloaded and setup the Wallet app.

I would say go for it if you are looking to appear “cutting edge” to your customers and don’t mind being an unpaid guinea pig for Google, Samsung, and CitiBank, but it’s not likely you will get a tremendous amount of actual commerce from the system. The available population is just too small for now.

WEMSK Short URL: http://bit.ly/y0a2PZ

Entry Filed under: Advice

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