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Google Wallet may be missing key partners

Nancy Gohring | May 26, 2011
While Google had some notable partners at the launch of its mobile payment platform, the companies that weren't there could end up determining the success of the project.

"The reason why you'd want to have Google Wallet is not because it's more convenient to pay with the phone than to pay with the credit card," Greengart said. "The reason to pay with the phone is because it's cheaper."

Past unsuccessful mobile payment trials assume that consumers want this technology mainly because it's more convenient. For the first time, with Google Wallet, customers have an incentive to use it. That's because Google has tied Google Offers, a new service, to the wallet. Google Offers is an electronic-coupon system that lets people get discounts on certain items when paying with Google Wallet.

Sprint could reason that that incentive is enough to attract customers to its network.

Another missing link for Google is non-Android phones. It did not mention other phones during the event and did not respond to a question about whether other kinds of phones are welcome on the platform.

Holland assumes that Google will let other phone makers use it. "If they truly are making an open wallet, it needs to be cross-platform," he said. Also, it would benefit Google to allow as many customers to use the wallet as possible because it can collect even more information about consumer buying behavior.

However, even if the other phone makers are welcome, they may not want to support it, primarily because they'll see just how much Google stands to benefit from the offering. "The cleverist part of this is Google is now transcribing its existing business model in the online space to the physical world. They literally get information that's extremely valuable. They can correlate directly sales in the physical world to ads placed by retailers online," Holland said.

Other handset makers like Apple would likely prefer to collect that data themselves, rather than enable Google to do so.

Google is also now pitting its offering against one from Visa, which has been aggressively working on various mobile payment technologies. Visa argues that its offerings are more open than Google's. "Our mobile solution in the United States is designed to be used on any mobile network, with any NFC-enabled smart phone, with any financial institution and on any payment product (credit, debit, prepaid)," Jim McCarthy, head of global product for Visa, wrote in a blog post in response to Google's announcement on Thursday.

Visa plans to launch a digital wallet product in the U.S. and Canada later this year and already offers a mobile payment program at retailers around the world. It has agreements in place with Bank of America, Chase, U.S. Bank and Wells Fargo for mobile payments.

 

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