Google Wallet: Google revamping the product to keep on par with Apple

Friday 27 February 2015 | 16:25 CET | Background

Google has recently signed a deal with Softcard, the mobile payment venture of the main US mobile operators. This deal includes Google obtaining technology from Softcard but most importantly it means a deal with the three US MNOs to have Google Wallet pre-installed in the future on Android phones running KitKat or higher.

Although the judge is still out on the success (or not) of Apple Pay, Google of course had to react to Apple Pay’s introduction, and it is looking for a way to revive its ailing Google Wallet.

Apple Pay has not immediately grabbed the US consumers’ attention: on Black Friday only five percent of possible Apple Pay users actually made use of the service, although that was only shortly after its launch . Apple is continuously expanding the number of stores where Apple Pay can be used, and in January Apple CEO Cook announced that out of every three dollars spent using contactless payments, two dollars were paid via Apple Pay.  However Apple Pay (and any other NFC based mobile payment solution) is currently hampered by the lack of NFC terminals in the USA.

If some of the top US retailers switch to NFC terminals, it could pave the way for mobile payments in US. This year most American retailers are encouraged to upgrade their terminals to at least EMV standard or otherwise they can be held liable for any fraud by the cards used. So it is logical to expect that a large number of them will immediately upgrade to terminals allowing EMV and NFC. The 2015 Boston Retail Partners POS Customer Engagement survey (held in November and December 2014) shows that by October 2015 a further 35 percent of retailers are aiming to have implemented NFC, next to the 10 percent who indicated to have already done so. The survey also showed that 8 percent already accepts Apple Pay versus 3 percent for Google Wallet and Softcard, while 48 percent intends to accept Apple Play within the next three years, versus for 43 percent for Google Wallet and 26 percent for Softcard.

Softcard (formerly ISIS) was set up by the American MNOs to counteract Google Wallet and a possible Apple payment solution, but it never got any real traction amongst the US public. It was rumoured to be looking for a buyer and Google can use the technology to breathe new life into Google Wallet, which it is rumoured to relaunch in May this year.

Next to having more mobile phones which can carry Google Wallet than Apple Pay (only available on iPhone 6 or 6 plus), Google may also be able to offer retailers better advertising partnerships by allowing insights into consumer purchase data, as Apple has refused to do that.

Although the US market is of course very important to both Google and Apple, they also have to look to other regions. Apple has not yet announced when Apple Pay will be available outside of the US but rumours are it will be introduced in the UK/some parts of Europe in the first half of 2015. Android has a large market share in many European countries. In some of them the contactless infrastructure has been growing significantly due to the introduction of contactless bank cards by the larger banks, for example in the UK, France and the Netherlands. In most European countries mobile payment is still in its infancy but a growing infrastructure should help both Google and Apple once they introduce their respective wallets. To achieve having Google Wallet preinstalled on Android phones in Europe, Google would need to do deals with many different MNOs and that is not likely to be easy as several of them have launched their own mobile payment product already, such as Vodafone. For Apple the initial problem mostly lies in the small percentage of their total customer base with an iPhone 6 or 6 Plus, as for example in the Netherlands only 13 percent had an iPhone 6 (or 6 Plus) in January/February 2015 (based on the Telecompaper Consumer Panel), although over the years that issue will dissipate.

Another important factor which Google will have to deal with, and Apple doesn’t, is the fact that the Android device manufacturers so far have not shown any interest in co-operating on Google Wallet. The largest manufacturer, Samsung, recently even bought LoopPay to build its own mobile payment service. This means the Wallet war is only just starting, with Apple and Google seemingly in a good position to end up as the leaders.

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