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    Google Wallet Won’t Succeed: 10 Reasons Why

    By
    Don Reisinger
    -
    May 28, 2011
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      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.

      Google Must Balance Multitude of Competing Interests

      5. The lawsuits are already flying

      When Google launched Wallet, it must have known that it would be facing some outcry from competitors that would be trying their luck in the marketplace, as well. But who knew that it would be facing lawsuits so soon after launch? Not long after Google unveiled Wallet,PayPal sued the search giant over claims that it allegedly stole trade secrets when it poached ex-PayPal executive Osama Bedier for Wallet. Google hasn’t commented on the suit yet. But the suit could have significant ramifications.

      6. Adoption will be too slow

      Considering Google Wallet will be available at first on a single device and it will work only with Citi’s PayPass system, it might be hard for the technology to get off the ground. Since the service is only running on a single device, few users will even jump at the chance to use it. Google Wallet might be a victim of its own uniqueness.

      7. It’s too soon

      The idea of near-field communication has been around for years now, and there is little debating that the technology will continue to play a key role in payment processing going forward. But one must consider whether Google Wallet is ahead of its time. After all, the devices, retailers and even Google itself don’t seem ready to deliver everything that the market needs to be successful. Google Wallet might have had a better chance of being successful if Google launched in late 2012 or even later.

      8. Can Google handle the different interests?

      Google will need to deal with the many different interests of all the stakeholders in the marketplace. There are some companies, including credit card firms, that might want to try their luck in the NFC space. There are vendors that might not see value in delivering NFC. Every company will want a fair piece of the revenue pie. Google will need to handle and accommodate the many different interests of stakeholders and do so to its own advantage. That’s no small task, and it’s impossible to know if the company can pull it off.

      9. The competition is coming

      Speculation abounds that Apple will be bringing NFC technology to the next iPhone. If that happens, Google could be in for trouble. As noted, the search giant needs help from vendors in order to offer Google Wallet on devices. Apple, however, has full control over the iPhone hardware and the software. That alone gives it an advantage that could prove extremely troublesome to Google over the long term.

      10. Educating the public

      NFC is still a new technology to consumers, and Google’s job now is to inform them on why they should want to use Wallet rather than their own credit card. Unfortunately for Google, that might be a hard sell. As identity theft becomes a hot-button issue around the U.S., consumers are more sensitive to their security than ever. The idea that they might need to cancel their credit cards if their smartphone is lost or stolen might not appeal to them. Add that to the fact that more people choose an iPhone over any other single Android device, and it quickly becomes clear that educating users on the benefits of Google Wallet is more about helping them feel better about its disadvantages. Simply put, Google Wallet isn’t an easy sell. And that could derail the service before it even has a chance to get going.

      Don Reisinger
      Don Reisinger is a longtime freelance contributor to several technology and business publications. Over his career, Don has written about everything from geek-friendly gadgetry to issues of privacy and data security. He became an eWEEK contributor in 2009 producing slide shows focusing on the top news stories of the day. When he's not writing, Don is typically found fixing computers or playing an old-school video game.

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