We’re barely halfway through March, and already this month we’ve seen two big moves in the mobile payments space. PayPal’s new Here system uses mobile phones and blue dongles to strengthen a well-known company’s standing with small merchants, while Green Dot’s acquisition of Loopt yielded a dark horse candidate in the mobile wallet competition by adding a LBS-based marketing component to its stored value cards.
Meanwhile, check out the latest results when searching for “google wallet” on Google’s own News search tool:
It’s a pretty rough scene (save one entry — more on that later). Even Google Wallet’s own press page seems to be dying for a good story: its last official news announcement was issued in May, when Citi, MasterCard, First Data and Sprint were announced as partners.
Back at the PYMNTS.com ranch, we recently opened the mobile wallet discussion up to you, our readers. Here’s what you had to say about Google Wallet (edited slightly for presentation):
So there’s that. But at the same time, it’d be ridiculous to suggest that a few bad headlines and PYMNTS.com reader comments mean a less than successful run by Google into mobile payments. To extend the horserace metaphor, you could say they’re currently a few lengths off the lead — but far from out of the race.
Still, if they’re not currently in first it means they’re in need of a strategy for getting there. What if Google adjusted its strategy? Here are three potential strategies to ponder.
1. Google debuts a swipe reader of its own.
Apparently there’s a new mantra for the payments industry: When in doubt, dongle. PayPal made it all the way to the evening news on network television after the debut of its blue triangle, despite being nearly two years late to the small merchant mobile payments party. Payments industry insiders know PayPal’s dongle has much broader implications for the industry than just another swipe reader, but for Brian Williams and his viewers, a cool new, triangular-shaped, bright blue gadget by a cool Silicon Valley company going head to head with Square is just enough to be captivating. (Indeed, Ebay’s stock gained 2.34% on Friday.)
With that in mind, a swipe reader from Google would almost certainly create a boatload of press for them. As others have shown, you don’t have to be original to benefit from a new gadget. Furthermore, Google has an asset that none of the other swipe reader brands can claim: a device manufacturer, in Motorola. Who knows what might be on the drawing boards at GOOG and how that might inspire dongle v.3.
2. Google manages to win via the mobile device front.
To call the mobile payment war a complicated one is an understatement. Every smartphone has three component players behind it: the hardware manufacturer; the operating system designer; and the cellular carrier that provides service.
The carriers have made their stance in this war clear: they want a piece of the action, and they’re willing to cooperate with their fiercest rivals to get that piece. To that end, AT&T, Verizon and T-Mobile have their own combined plan for mobile payments.
But it’s hard to see how Isis can impose any sort of standards on the mobile world without reaching agreements with the two other segments of the mobile phone world, the hardware manufacturers and the software developers. And Google’s Motorola holds a larger share of the mobile device market than Apple, according to comScore. Google is also the leading operating system provider for smartphones, with more than 46% of that market as of January (Apple had 28%).
With so many moving parts, it’s impossible to neatly size up this complicated aspect of the mobile payment battleground. But that very same chaotic atmosphere gives Google a venue for making headway against some of its competitors. Could the GOOG become an Apple? Well, it has an operating system, apps store, and now a device manufacturer under its control. What it lacks is an iTunes equivalent, which may mean that “What if” #3 is the most likely move of all.
3. Google bags NFC, and moves its wallet to the cloud.
Right now, GOOG’s whole mobile strategy is tied to NFC and a smart phone that has little penetration (Sprint Nexus S). Sure, there are about 350,000 every day merchants that have the capability installed, but the intersection of NFC-enabled merchants and people with Sprint Nexus S phones doesn’t exactly ignite mobile payments for anyone, much less Google. You gotta believe that Google, the quintessential software platform, has some cloud-based options up its sleeve – if nothing else to hedge its bets in the mobile payments arena. At least here in the US, it is looking less and less likely that NFC is anywhere close to igniting, and a solution that made it easy for the XX millions of people with gmail accounts to create digital wallets in the cloud seems like a real no brainer.
Given how complicated Option #2 above is (code for, “It will take a long time since it lacks a key asset called a payments account,”), and how “me too” Option #1 is getting to be, Google may well choose to avoid both of those messes by offering a similar-yet-different cloud wallet to compete with PayPal. Yes, Google has a foothold in mobile with Motorola and Android, but there’s no doubt that the web is its home turf. Beyond search, Google Checkout and Google Offers both offer synergy opportunities for a cloud wallet.
To summarize, the world’s most popular web search company may be out of the lead position but it’d be foolish to call Google out of the mobile payment war. All it would take is one of these “what if’s” to break and the landscape shifts dramatically. Stay tuned!
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