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Google Wallet: Missed the Birthday Party?

Hello Google Wallet,

your birthday was 2 months ago. I followed your birth on Youtube. You're the reason why I started to get interested in mobile payment. Before you came on stage, paying with mobile was something for children, such as downloading ringtones.

Did I miss your birthday party? Or was it like this: You did not feel like celebrating.

Your once proud parents Stephanie Tilenius and Osama Bedier did leave you and a little sister (Google Wallet plastic card) will probably not come.

What had gone wrong?

On the start it seemed that Google had done everything right to get with Google Wallet another successful product on the market. Osama Bedier, a renowned expert, was hired away from PayPal. The payment was left with the banks or with the credit card companies.

With NFC they put on a technology that should prevail already through the contactless credit cards. In addition, Google could win a number of dealers for Showcases in the field of couponing and loyalty.

The only flaw in the construct was the small number of available phones. NFC on the smartphone was not widely used two years ago. It also had to be special phone with a built-in Secure Element (SE) to enable Google Wallet. This was initially limited to the Google Nexus S.

Only one MNO partner was presented for Google Wallet, Sprint. The other major U.S. American MNO's showed the cold shoulder to Google and concentrated on their mobile payment project ISIS. In particular, Verizion blocked Google Wallet successful in its own mobile network.

The next setback came after a year. Hackers were able to demonstrate how to obtain access via a clean install without knowing the PIN of the wallet. The hack would have been relatively easy to fix from a technical perspective. But through press releases, consumer confidence was so shaken. Google decided to form a complete relaunch. This was accompanied by a paradigm shift. Rather than load the credit card directly to the SE, there was only a virtual Maestro debit card. The end user could then connect this with his suitable credit or debit card in the cloud.

One would think not a very profitable business for Google. How this business model should work anyhow, can be found at this Link here.

MasterCard at least was not thrilled from this procedure. All details of the payment process were now in the hands of Google. A penalty from the card schemes for this business model is under discussion. Also, the trade side found this enormous concentration of consumer information in the hands of Google to be suspicious. Therefore, they founded their own mobile payment company called MCX. Here the retail giant Walmart is involved.

Nevertheless Osama Bedier and the team of Google Wallet is due at least my respect. They have done pioneering work for payment on mobile.

In this sense: Happy Birthday Google Wallet!


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Comments: (1)

A Finextra member
A Finextra member 19 July, 2013, 23:46Be the first to give this comment the thumbs up 0 likes

The cost, after all, was not an issue. Even our team figured out how to "wrap" other cards in a feasible way. The issue has been a political one, with the (big) banks fearing disintermediation (and, hence, putting pressure on MC), even though Google was willing to play ball in respect of the transaction data.

Osama is still bullish on the "wallet" concept (and is somewhat bearish on cards and MCX, mid-term). 

Most payment companies solve non-existent problems. GW aimed to bring convenience and ubiquity, whilst still being "mobile". Perhaps the answer was (is) indeed in a better form factor...