The Google Wallet initiative has been heavily scrutinised, but its inability to achieve tearaway success makes it appear to be more of an experiment than an integral payment solution.
The Google Wallet app, once heralded as a potential game changer in mobile payments when it was first released two years ago, has been downloaded less than 10 million times, according to Google’s app store, Play. With so few downloads, can Google Wallet still be viewed as a successful initiative?
According to Bloomberg Businessweek, the former Head of Google Wallet, Osama Bedier (who stepped down in May) believes that Google is paying such high fees to its partner credit-card companies that it’s losing money on every transaction made via the application. However, Google’s goal wasn’t to generate revenue, but data.
By collecting data regarding critical purchasing behaviour, Google would have an increased ability to create and target marketing to those consumers.
Peter Cook, CEO of payments technology specialist, Novatti, believes Google Wallet’s marketing agenda may be helping to stifle its uptake.
“Google sees that transactions give them another chance to display ads,” Cook says. “Think about the following – your customer is in your store, about to buy something through their Google Wallet on their phone and Google displays an advertisement, right before the final purchase, showing a cheaper product from your competitor across the road! Do you really want Google to control the final purchase moment of your customer?”
However, other Wallet initiatives seem to be struggling to get off the ground, with Google potentially scrapping a Wallet-based credit card in favour of creating a rival to Square’s card-reading tool.
Of course, the major problem with the Google Wallet app is that most consumers can’t use it. In the US, only two of the major wireless companies support it. Verizon Wireless, AT&T and T-Mobile USA block the use of Wallet on their devices. These carriers have instead banded together to create their own version, Isis, and they’re not alone.
In Australia, the Google Wallet technology simply hasn’t been made available yet – a fact that Cook is clearly happy with.
“There isn’t a brand in Australia that can match Google for financial clout or sheer market power,” he says. “So who would win in a potential bun fight over ownership of customer data – a local bank or Google? Beware the Trojan horse called Google Wallet.”
The mobile payments market remains a prize that no single company has managed to capture. While many (including Google) continue to innovate towards a breakthrough, it would appear we’re yet to see a solution that truly fits the bill.
Read more on The Battle for Mobile Payments.