Google has signaled that it will do two things no one else in the payments ecosystem has done or even talked about: make a business case for merchants and consumers around NFC and maybe even put some real money behind it.
Google has obviously made a decision that NFC is an opening into something more interesting and lucrative than transforming a phone into a payment card– advertising and marketing opportunities at the point of sale – the physical point of sale. And, it has done a deal with VeriFone that takes the economic sting away from the merchants who need to buy into their vision to make it work – and who have by and large turned their noses up at NFC up to this point. Layer on top of that their Google Checkout asset and their newly launched One-Pass wallet application and you have the makings of an interesting new payments player. What’s more, Google is building this capability on top of its core assets – online advertising, eyeballs and now its hockey-sticking market share of Android operating systems. The result is the potential to position itself as not just a payments player, but one that has can blend on and off-line transacting in a new, interesting and potentially big way using the mobile phone as a conduit to the physical and online commerce worlds.
What’s amazing is that Google was the first to connect all of these dots. No doubt those loyal readers of PYMNTS.com have read more than a few of my skeptical musings over attempts to use NFC merely as a way to turn phones into cards. That ship had not only sailed but it hit a huge sandbar when terminal subsidies to merchants dried up and no one tapped at the point of sale even though there were millions of cards in circulation. There was just nothing in the way of a value proposition around NFC as a mag stripe replacement. Yet for years the traditional players continued to invest in and follow a traditional path around NFC deployment which marginalized its potential as enabler of commerce, not just transactions.
Google has both the money and the motivation to drive success. They also have two more things: lots of money and lots of data. Google is an advertising platform and is sitting on treasure troves of data that it successfully monetizes today on their platform. It has a built an engine that can be used to drive offers, targeted offers, and a business model that does not need transaction revenue to pay the bills. It’s why Google might be very happy to fund merchant terminal deployment that traditional card networks can “free ride” – their payday is much richer and much less dependent on marginal transaction costs. Google could really knit together an interesting business model that in and of itself could be disruptive and a customer base and offers platform that could outmaneuver its once-upon-a-time love interest, Groupon.
All I can say is that it took Google to finally make NFC worth paying attention to, for everyone.
Karen Webster is the President of Market Platform Dynamics (MPD), a consulting firm that helps companies find, implement and monetize innovation. She serves as an advisor and member of the board for a number of companies operating in the payment, technology and digital media industries. More info here.