Trouble brewing for Google Wallet

Cherian Abraham | November 29, 2011 | MobilePaymentsToday.com

I believe in Google's capability to actually pull off mobile payments. I believe Google does get it. With all its initial failings, its misplaced loyalty towards NFC and the existing payment rails, I believe it truly have a shot at fixing payments and closing the loop in local commerce.

Let's look at what is going right for Google: Android is fast becoming the dominant ecosystem on mobile, with over 200 million devices so far and 550,000 activations happening every day. It has made Android a force of nature that is now slowly eating away at Apple's market share. It has a mobile wallet initiative out front at least more than a year before the closest competitor – Isis. It has had some notable successes with retailers (e.g., Gap) and has partnered with New Jersey Transit for payments. Formidable partnerships with Citi, FirstData and MasterCard should be all that is needed to prod more issuers in to joining Google Wallet.

Even with all this momentum, Google Wallet does not seem to be having a good day so far.

Despite Visa's significant call for EMV in the U.S. by way of threats to shift fraud liabilities to processors (and from there to merchants), balanced equally by the carrot of PCI audit compliance avoidance, NFC still faces considerable challenges to adoption. Apple chose not to include NFC in the iPhone 4S knowing fully that to do so without first creating a compelling offline commerce solution (the strains of which were heard in its recently revamped Retail App enabling easy payments in stores) would be advantageous to Google or others. Rumors abound that the Isis carriers are discouraging Google Wallet from being included on the Android phones provisioned on their networks, which has far reaching implications for both Google and Android. Meanwhile, Amazon has the clout to both build a payments presence and roll it out as part of its forked Android flavor Fire. But more importantly, Google Wallet is lacking what it needs most to make an impact: issuers. (more)