Google has effectively acquired Softcard, the mobile payments system backed by Verizon, AT&T and T-Mobile, and will pay the mobile carriers to enable Google Wallet on the Android smartphones they sell, the companies announced on Monday (Feb. 23).
The deal finally puts an end to four years of wrangling between the mobile carriers and Google, during which Apple created its own mobile payments system and captured the lion's share of in-store mobile payments with Apple Pay.
No financial details -- and few details at all -- were disclosed in separate blog posts by Google and Softcard. Google said that "the Google Wallet app, including the tap and pay functionality, will come pre-installed on Android phones (running KitKat or higher) sold by these carriers in the U.S. later this year. We're also acquiring some exciting technology and intellectual property from Softcard to make Google Wallet better." Reports last week put a $50 million price tag on the deal.
For its part, Softcard announced that Google "has acquired Softcard technology and capabilities to power the next generation of mobile payments." Softcard added that, "For now, Softcard customers can continue to tap and pay with the app" and it described the deal as "a positive step forward for the mobile payments industry and wireless consumers."
There's no indication that Google will be acquiring any employees from Softcard, which laid off 60 staffers in January.
The deal ends a longstanding feud between the two in-store mobile-payment efforts. The three mobile carriers who backed Softcard actively blocked Google Wallet from using the NFC chip in smartphones the carriers sold, which limited the number of potential users for Google's service, as the Wall Street Journal noted.
Google also had limited success getting banks on board for Google Wallet, while Softcard was widely viewed as the preferred effort by card-issuing banks. But neither effort was able to get enthusiastic support from retailers, including training and signage necessary to let both employees and customers know that mobile payments were possible.
While the Google-Softcard fight may be finished, and Apple Pay's success has made mobile payments highly visible to consumers (and so far hasn't moved into the Android ecosystem), Google's attempt to revive Wallet still faces significant hurdles -- not least that the biggest Android phone maker, Samsung, has acquired LoopPay to launch its own payments system.
And while Google has shifted the technology it uses to Host Card Emulation, which doesn't require the direct participation of banks to use a payment card with Google Wallet, the search giant will still have to find a way to pay for the costs of the system -- including what it will pay to mobile operators -- either through customer-data-related deals with retailers or some other revenue stream. Apple, in contrast, negotiated deals by which card-issuing banks subsidize Apple Pay.