One Wallet to rule them all, but will it be Google’s?

Google launched its smartphone Wallet service this week, adding long overdue impetus to the mobile payments movement. Teaser videos of George Costanza carrying an exploding, over laden wallet, landed on 16 September causing much speculation from industry analysts. Whilst some are quick to cite Google’s historical dominance in other tech areas as a reason Wallet will dominate, others are more sceptical.

They point to a few telling issues surrounding the technology, saying it won’t be the tour de force that is expected. The one thing that stands out for me is the slow rate of adoption of cellphone payments in the west whilst in places like Japan it has been around for a while. Some of the factors hindering the adoption of the technology include:

A lack of user knowledge about the technology: Your average mobile user isn’t going to know about Near Field Communications – which allows for simplified transactions, data exchange, and wireless connections between two devices in close proximity to each other, usually by no more than a few centimetres; nor are they going to know about MasterCard’s PayPass which is the terminal upon which you swipe your mobile phone to make the transaction.

A lengthy rollout of new technology: It would be interesting to note how quickly debit and credit card machine technology took to rollout across merchants across the planet. Visa and MasterCard have licensed their new technology to Google but it’s the rollout of these receptacles or terminals that will hold a major piece of the adoption pie.

Square is doing a good job of trying to rollout its technology by mailing the Square Reader to users free upon signup. Also remember that for NFC technology to work, your phone has to have an NFC chip. That said, Google Wallet might also have its apple cart tipped by the inclusion of an NFC chip in the iPhone5. Apple after already has some its user’s credit card or billing details to hand via iTunes after all. Which brings us onto our next point.

Ignoring old technology: A lot of African and emerging market mobile commerce is driven by the usage of USSD whereby the consumer sends a payment request via an SMS text message or an USSD to a short code and a premium charge is applied to their phone bill or their online wallet. The latent issues with USSD are reliability (some messages get lost), slow speed (messaging takes time and it can often take hours for the merchant to receive the payment from the user), and, above all, security as the The SMS/USSD encryption ends in the radio interface and then the message is in plaintext.

Getting credit card companies and mobile carriers on board is tricky: Despite licensing its technology to Google, Visa has gone onto its blog reminding users that it has plans of its own, as do American Express and PayPal. At time of writing, Google has also only partnered with Sprint in terms of mobile carriers, Mashable reports that:

Mobile carriers have also begun working on their own competitor to Google Wallet. Verizon, AT&T and T-Mobile are reportedly investing millions in Isis, their own mobile payment project. So far Visa, MasterCard, Discover and American Express have signed on to the service. It is expected to roll out sometime in 2012.

What this means is that mobile payments won’t be dominated by 2-3 companies, it’s still very segmented and user adoption will dictate what stays and what goes.

If we step back from the coalface a bigger picture emerges with regards to how Google wants to operate in the future, says Forrester employee Thomas Husson:

“Google’s interest here isn’t in the payments; it’s in the data that underlies the complete chain of commerce including consideration, promotion, transaction details, coupons, and receipts.”

If we compare this viewpoint to Google’s “real name policy” employed on Google+ we can start to see how Google, despite saying it won’t track purchases, wants to close the circle with regards to what you search, what you broadcast and what you end up consuming. Privacy advocates like @singe will be tearing their hair out thinking of all the personal information Google could potentially end up getting.

Another interesting development is the promotion of Google Offers within the Wallet product. Back in December, rumours were rife that Google was in talks with Groupon. Instead the internet giant acquired restaurant rating company Zagat earlier this month and we can now see where this kind of service fits into the bigger picture: Users are going to get great information and also be able to save by using their Google Wallet which automagically loads up special offers and coupons.

Speculatively, what we can see happening in the future is Google recommending a great restaurant based on your eating habits and giving you a discount for going there, a potentially scary yet thrilling prospect.

Image: inky



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