Unconfirmed reports that Google could soon launch a mobile payment service called Plaso have stirred speculation over the future of the company's existing Wallet service and its commitment to the near-field communication (NFC) protocol for mobile payments.
Google's alleged plan was reported earlier this week by The Information, which described the service as something that would allow Android users to pay for purchases by verbally providing their initials to cashiers at point-of-sale terminals.
Google employees have been quietly testing the service since last fall, TI said, citing information it obtained from four sources who are allegedly close to the company's plans. The company apparently has been piloting the service at Papa John's and Panera Bread.
Pymnts.com described the service as a "contextually-aware mobile, Bluetooth-based payment system." A user subscribed to the service would simply approach the cashier when ready to pay for a purchase with his or her Bluetooth-enabled phone in hand or on their person. The user's phone would show up on the cashier's Plaso payment device along with devices belonging to other Plaso subscribers in the immediate vicinity of the casher. When a user says the initials associated with his or her device, the cashier matches it against the initials presented on the payment device to somehow complete the transaction.
"The system apparently relies on a voice-activated method for security that involves users saying their initials when they are at the cash register," Talk Android speculated in its report on the service. "This trigger helps the hardware at the cash register identify and connect to the correct smartphone to accept payment."
Google did not respond to a request seeking more information on its alleged plans to launch the new service.
But such a move would not be entirely surprising for the company. The mobile payments business presents a huge opportunity for Google, just as it does for Apple, PayPal and several others.
Forrester Research predicts that U.S. mobile payments will grow to around $142 billion by 2019 from $52 billion in 2014. Over the next five years, the analyst firm predicts that mobile payment growth rates will accelerate as consumers integrate smartphone use into almost every single aspect of their lives.
Google, which entered the mobile payment space with Google Wallet back in May 2011, has so far not been able to capitalize on its early entry into the market. An investment research report by ITG in December showed Google Wallet accounting for barely 4 percent of overall digital payment dollars in November, compared with Apple's 1 percent share barely one month after the launch of its Apple Pay service. What made Apple's performance even more impressive, in contrast to Google, was that Apple Pay is only available to customers with the newest hardware, ITG had noted in its report.
When it first introduced Wallet, Google described the service as one where Android users would be able to pay for purchases simply by tapping their NFC-enabled phone against a similarly equipped cash register. It promised that consumers would be able to store credit cards, loyalty cards, coupons and other offers in Wallet. "When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you," Google had claimed at that time. "Someday, even things like boarding passes, tickets, ID and keys could be stored in Google Wallet."
But in recent months, it has been Apple that has been garnering most of the mind- and market share in the mobile payments space. Both ITG and Forrester expect it to totally dominate the market in 2015.
What Google is likely hoping to do with Plaso is try to ignite some consumer interest around its own capabilities in this space.
"The company's Wallet service has failed to really catch fire since it was launched three years ago, likely because it was too far ahead of the curve," said Charles King, an analyst at Pund-IT.
"The reported success of Pay could signal that sizable numbers of consumers are actually ready to give electronic payments a go," he noted. "If that's the case, Plaso would give Google a way to reboot what they've invested and learned from Wallet without being dragged down by what many might consider a damaged brand."
Google's reported interest in buying mobile payments company Softcard could complement a payment system like Plaso, according to King. If the rumored purchase turns out to be true, "Google's market position could be stronger than what Apple has with Pay," he said.
One of the challenges that Google faces, which Apple doesn't, is that it doesn't manufacture a majority of the Android devices sold in the market, said Dan Maycock, director of strategy and analytics at Transform.
"When your operating system is open source and hardware is being supplied by others, it's hard to gain trust," Maycock said. Since Apple directly controls the destiny of its products, the company is able to integrate security and reliability more efficiently than Google can, he said. "So much is at risk having an open-source operating system and hardware you don't control."