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On Sept. 19, Google launched its mobile-payment system, Google Wallet. The offering allows users to pay for products from their Google Nexus S after loading a credit card onto their Wallet app and tapping the device against a reader. The idea, Google says, is to make it easier for consumers to make purchases, as well as securely buy products without needing to search through a wallet to find plastic.
As the first major player to the market, there’s a chance that Google Wallet will gain an early lead. Considering how lucrative mobile payments could eventually be for Google, it shouldn’t surprise anyone if Google spends an inordinate amount of cash to solidify its position in the marketplace. But to say now thatGoogle Wallet will reign supreme in the mobile-payment business would be premature. In fact, there’s a good possibility that Google Wallet won’t dominate that space at all.
Here’s why.
1. Consumers lack knowledge, experience
Unfortunately for Google and any other company thinking of competing in the mobile-payment business,there is a general lack of knowledge among consumers about how it all works. They hear buzzwords, like near-field communication, and they’re unsure of what that all means. What’s more, no company has really explained it to them. Until consumers fully understand mobile payments, no company can win out in that market-Google included.
2. Limited phone availability
For now, Google Wallet is available only to Google Nexus S owners. That device, which is running on Sprint’s network, is by no means the most popular smartphone in the market, and since it’s available only on one carrier’s service, the vast majority of consumers won’t even be able to run Google Wallet. Google says more devices will support Wallet in the future, but until that day comes don’t expect its service to be too well-known outside certain circles.
3. All wireless carriers aren’t onboard
In a blog post announcing Google Wallet on Sept. 19, Google said that it was “releasing the first version of the [Google Wallet] app to Sprint.” For now, Verizon Wireless, AT&T and other carriers are not in partnership with Google. Andconsidering those firms reportedly have their own plans in the NFC market, they might not want to jump at the chance to support Wallet so quickly. Until wireless carriers jump on the Wallet bandwagon, the service won’t be rapidly adopted in the market.
4. Apple might jump into the space
There is rampant speculation that Apple will bring an NFC chip to the iPhone 5. If it does so, the device could support Apple’s own Google Wallet competitor. Such a platform could be a major force in the marketplace. After all, Apple has a boatload of customers who have their credit card information on file with iTunes. If it could find a way to use those for its own Wallet competitor, Google’s service could be in for trouble.
Security, Marketing Questions
5. There will be multiple competing services
Apple isn’t the only company vying for dominance in the mobile-payment business. A number of firms, including PayPal and Visa, are reportedly working on mobile-payment services that could compete against Google Wallet. Simply put, the mobile-payment business will become highly fractured in the coming years, and that could very well hurt any company’s ability to score major market share.
6. There are too many moving parts
With Google Wallet, there are simply too many moving parts for the service to quickly take off and dominate the space. For one, handsets need to have an NFC chip and support the software. Secondly, Google needs to get credit card companies onboard. From there, the search company needs to get merchants to support Google Wallet. In other words, there are multiple steps Google must take to achieve a highly profitable level of deployment for Wallet. It might not achieve its goal for years to come.
7. It’s MasterCard, for now
According to Google’s blog post announcing Wallet, MasterCard credit cards will be supported with its new service. However,cards from Discover, American Express and Visa are not supported, although Google said that support “could” come in future versions of its service. Until then, it’s a major issue for Google. Until all the major credit card companies jump onboard, there’s no way for Wallet to dominate the market.
8. Fear over security
There is already some fear that goes into taking plastic out of a wallet and handing it to someone to swipe. But when it comes to a new technology that allows credit authorizations to be passed over the air, a whole new range of worries crops up for consumers. Are those security fears warranted? They certainly are until Google proves otherwise. As a result, Google will have a hard time persuading people to use Wallet until they demonstrate that the service can’t be compromised by cyber-criminals.
9. Generally poor marketing
So far,Google has engaged in very little marketing for Wallet. And so far its early marketing efforts haven’t looked all that effective. Most recently, Google used a clip from the television show “Seinfeld” to showcase how Wallet might be able to solve a consumer’s troubles. But the search company will need to do better than that. Google Wallet is an unknown entity in today’s mobile space, and Google will need to push hard to get folks to pay attention to it.
10. It’s still in its infancy
The mobile-payment business is still very much in its infancy. In the coming years, there’s no telling where it might go, what experience consumers prefer and how well the available services will deliver what consumers want in a secure and reliable mobile-payment system. So, while it’s theoretically possible for Google Wallet to eventually dominate the marketplace, it’s quite unlikely. At this point, it looks like several companies will have a shot and none, at least for now, will stand out above the rest.