News Analysis: Google has unveiled its long-awaited Google Wallet with the near-field communication technology that allows people to make purchases and mobile payments with Android-based smartphones. But will it succeed? Probably not.
Google
has finally unveiled the long-awaited Google Wallet, a service that allows
users to pay for purchases with an Android-based smartphone. The offering
effectively turns the smartphone into a wallet, thanks to near-field
communication technology.
With
the launch, Google ostensibly believes that the days of swiping credit cards
are coming to an end. Going forward, wirelessly connected people around the
globe will rely upon their smartphones and nothing else to quickly and
efficiently pay for products.
However,
debate rages over whether Google Wallet will actually be able to succeed in a
market that has relied on credit cards for decades. After all, people are
currently carrying around several cards from different banks, and they've grown
accustomed to that purchasing process. Moreover, Google will need to work long
and hard to educate the public on why its option will be at least as secure as
and even better than all the others that are coming along.
Simply
put, Google's road to success with Wallet will be long and hard. And at least
for now, the cards are stacked against it.
Read
on to find out why:
1. First and foremost: Security
Google
knows security will play a key role in the success of its Wallet option. To
help improve security, the company requires users to establish a PIN that must
be entered before purchase. The search giant said that payment information is
encrypted and thanks to MasterCard's PayPass feature, users should be secure.
But will they? As cyber-criminals become more accustomed to how Google Wallet
works, it will be put to the test, and issues could arise. Plus, if a user
misplaces his or her phone or it's stolen, Google offers a single solution: "Cancel
your cards." That alone could derail Google Wallet on its path to success.
2. Vendors need to get in line
There
are many moving parts that must all work together for Google Wallet to succeed.
A big one is vendor support. According to Google, Wallet will be available on
the Nexus S 4G from Sprint first, with more devices to follow. The only issue
is that Google Wallet will only work on NFC-enabled devices, and as of this
writing, there are only two that support that technology. More companies will
in the future, but if Google doesn't get the kind of vendor support it needs in
the short term, it might not be long before Google Wallet fails.
3. Merchants need to play ball
In
order for Google Wallet to be a success, the search giant will need merchants
to support NFC in their stores. Partnering with Citi and its PayPass service is
a good first step, but that offering is a relatively small number of places
around the U.S. when one considers the sheer number of locations where products
can be purchased. Credit cards, on the other hand, are welcomed at the vast
majority of retail outlets around the country. Google will need to do quite a
bit to improve retailer support just to get Google Wallet off the ground, let
alone make it succeed.
4. Payment processors too
As
mentioned, Google has partnered with Citi MasterCard to launch Google Wallet.
But the company must also partner with other top banks to ensure that it can
get its offering working with as many cards and technologies as possible.
American Express, Visa, Discover and other top credit card companies need to
see the value of Google Wallet. Google needs them to get on board.
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