Circulating in the rumor mill for several months, the Google Wallet is now a reality ― announced by partners Google, Sprint, First Data, Citi and Mastercard last week. CVS and Sports Authority are two of the first retailers to perform field tests of the Google Wallet in New York and San Francisco. Macy’s plans to launch the Google Wallet in 177 of its stores beginning September 1, 2011 in five cities: New York, Washington DC, Chicago, San Francisco and Los Angeles.
Industry analysts and researchers agree that the Google announcement is a significant step towards mobile payments and Near Field Communication (NFC) adoption throughout the U.S. “Just like the Isis and Visa announcements over the past several months, the announcement today was more compelling evidence of the momentum building for deployment of mobile payments in the U.S,” said Andrew Morris, CEO of Morris Consulting.
The Google announcement, Morris added, may be more significant than previous announcements because it is supported by a number of major retailers. “It was refreshing to see large important retailers, like Macy’s and Subway, have a central role in the announcement,” he added. “This aspect was strikingly different than previous announcements from Visa and Isis.”
The Google-MasterCard Connection
By working with the MasterCard PayPass network — a merchant point of sale service that enables consumers to tap their cards to pay — Google Wallet is immediately accepted at more than 124,000 PayPass-enabled merchants nationally and more than 311,000 globally.
“MasterCard has pioneered mobile payments with our PayPass technology and we’re proud that it is at the heart of Google Wallet,” said Ed McLaughlin, chief emerging payments officer, MasterCard, in a press announcement.
Google also is working to bring one-tap payment and promotions to more retail environments with the branded SingleTap shopping experience. Google is working with a number of POS hardware providers, including VeriFone, Hypercom, Ingenico and VIVOTech. Retailers already signed on to use SingleTap include: American Eagle Outfitters, Bloomingdale’s, Champs Sports, The Container Store, Duane Reade, Einstein Bros. Bagels, Foot Locker, Guess, Jamba Juice, Macy’s, Noah’s Bagels, Peet’s Coffee & Tea, RadioShack, Subway, Toys”R”Us and Walgreens.
“Google Wallet allows us to harness the power of mobile technology to enhance our in-store shopping experience and helps bridge the gap between our online and in-store consumer interactions,” said Martine Reardon, executive vice-president of marketing and advertising, Macy’s, in a press announcement. “Macy’s is always looking for cutting-edge technology that will deliver value and engage our customers in personal ways. Google Wallet delivers this unique interaction across channels.”
“We certainly applaud Google’s announcement in the mobile payments space,” said Greg Hammermaster, President, Sage Payment Solutions. “Their brand and distribution of Android phones with NFC-capable ‘tap’ is good for the industry. We view the NFC chip in the phone as more ‘physical mobile commerce,’ which has the promise of offering interesting loyalty solutions but, clearly, the marketplace will first need to catch up by deploying NFC-capable credit card terminals. And, that will happen at some point.”
One Of Many: Beyond Payment
Most industry experts agree that the Google announcement is just the first of many to come, most likely from companies such as Apple, Microsoft, Amazon and PayPal, not to mention the credit card companies and the phone carriers, noted Andrew Eisner, Director of Community and Content, Retrevo.
But payment is only the tip of the iceberg when it comes to the potential of NFC technology. “The fact is you will be using your mobile wallet to tap the shelf at the supermarket and get information about products and recipes,” Eisner said. “Or you will tap a movie poster at the bus stop and be redirected to the movie’s web site.”
“Using the term ‘mobile wallet’ may be the wrong characterization,” Eisner continued, “because it’s really a mobile way of getting information.”
Potential Barriers To Adoption
Confusion over which mobile wallet to choose and questions about privacy and data security could contribute to a slower adoption by consumers. But on the merchant side, spikes in payment processing costs also could be a contributor to slower-than-expected adoption, Morris noted.
“For merchants, this design could drive payment processing costs upward significantly,” Morris said. “ Instead of realizing the 70-80% reductions in swipe fees for bank debit cards as promised by the Durbin Amendment, the Google Wallet could shift the payment mix toward higher-cost tenders such as bank credit and prepaid debit.”