Google Wallet’s Lukewarm Adoption Sparks Rethink

by Matt Klassen on March 23, 2012

Google sits at a crossroads with its Google Wallet mobile payment system: cut carriers in on the revenues the platform will generate in exchange for support (and shameless promotion), or sidestep carriers altogether and simply go it alone.

Since its initial roll-out this past summer, Google Wallet, like many Google services of late, has been experiencing lacklustre adoption, with users, for the most part, simply not interested in such fledgling technology, particularly when the NFC technology Google Wallets utilizes is currently only available on a select few smartphones.

It’s a situation that has Google brass scratching their heads over how to promote their payment system and ultimately capture the coveted title as the default customer choice in the burgeoning mobile payment revolution. But if Google truly needs the carriers on board to make its Wallet platform a success it won’t be as simple as throwing them a share of the profits, as Verizon, AT&T, and T-Mobile currently have a vested interest in their own their own mobile payment platform, ISIS.

Currently Google Wallet faces two key issues:The lack of supporting technology and infrastructure, and the lack of support from major American wireless carriers. The former will be solved this year with more and more smartphones set to be released supporting the foundational NFC technology.

The latter, however, is what is proving to be a little more difficult to solve, as the current reality is that the major American wireless carriers have no incentive to support Google Wallet, given that they see no profits from the payment system and have their own ISIS mobile wallet platform fighting for the same market space.

Beyond that, though, carriers seem to be actively preventing widespread adoption of Google’s mobile payment platform as well, with Verizon recently blocking the Google Wallet app on its Galaxy Nexus smartphone (one of the few phones currently to support NFC technology), citing security concerns.

As I said initially, Google finds itself at a crossroads, and according to sources close to the company, it could really go either way. The search engine giant is said to be considering sharing revenues with carriers, particularly from the burgeoning mobile coupon segment of its Google Wallet platform, in an effort to get them on board, as currently Google Wallet requires a user’s phone, and thus a user’s carrier, to authenticate purchases.

However, the sources have also revealed that Google may just choose to avoid carriers altogether, altering its Google Wallet platform strategy to sidestep operators and instead rely solely on in-store terminals to complete transactions, with the authentication process happening on Google’s own servers instead of the user’s phone. Such a rethink initially sounds like a more work intensive process, particularly for Google and its vendor partners, but should the search engine giant choose this path, I doubt such issues would remain salient for long.

In the end, with the entire mobile payment revolution struggling to get off the ground it’s certainly not too late for Google to capture the lion’s share of the burgeoning market, but the search engine giant needs to be careful. On the one hand, wireless carriers clearly have a vested interest in hamstringing Google Wallet, meaning that as partners they clearly aren’t the best, yet on the other hand Google has traditionally struggled in the mobile market when it has decided to go at things alone.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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