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    Google Wallet to Lose Exclusivity but Let’s Start With a Launch

    By
    Clint Boulton
    -
    September 16, 2011
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      How are Google’s plans for local deals and mobile payments shaping up? It depends on who you ask.

      Google will tell you everything is simpatico, but honestly, where is Google Wallet? I attended the super-hyped, exciting launch event in Google’s Chelsea office in Manhattan in May.

      The service was due to launch in New York City and San Francisco this summer. Technically, it is still the summer and will be for the next 5 days, but come on! Temperatures dipped to the 40s last night here in Fairfield County, Conn. Fall is nigh.

      MasterCard held an event in the city yesterday afternoon, where it was revealed that Google Wallet would break free from the current exclusive ties it enjoys (or endures).

      That is, CitiBank is the big bank backer, MasterCard is the credit card provider, and Sprint is the first carrier on board, offering its Nexus S 4G handset as the vehicle for tap and pay service powered by NFC (near field communications).

      Apparently, Google’s initial partners will lose their exclusive rights to Wallet within months, Mung Ki Woo, MasterCard group executive for mobile and emerging payments, told ReadWriteWeb.

      The blog correctly noted that more choice for consumers is a key for Wallet’s success. Sure, but consumers have to be led to the fountain to drink. Nothing suggests the majority of consumers will buy into this; people need incentive.

      Of course, Google has an answer to this. It’s called Google Offers, a Groupon-clone with limited availability (but expanding its purview at a decent pace) that lets users buy local deals online at big discounts:

      Not a bad list, except that according to local deal aggregator Yipit, Offers is sucking wind. I got a hold of Yipit’s report and the numbers are not good:

      Yipit said that in just its third month of operation, Google Offers declined in each of its major markets:

      • Total revenue from Google dropped 23 percent from July despite a 22 percent increase in the total
      • number of offers.
      • Revenue per deal declined 37 percent, propelled by a 46 percent decline in the number of vouchers sold per deal, partially offset by an 18 percent increase in average voucher price.

      “Despite this increase, the average price of Google Offers’ vouchers remains far below that of Groupon and LivingSocial,” Yipit concluded. See the chart for context:

      For its part, Google isn’t putting stock in Yipit’s report. A spokesperson told me:

      We can’t confirm the accuracy of any third-party analysis of our business. We’re very enthusiastic about the momentum behind Google Offers.”

      Google provided some numbers to back it up:

      • Google sold 20,000 Fandango tickets before 8:30am in Portland,
      • 17,000 entries to the American Museum of Natural History in New York in just over 48 hours
      • 3,000 offers for Tattered Cover Bookstore in Denver

      “Like all businesses, Offers will experience seasonal/month-to-month fluctuations. But overall, Google Offers is performing much better than we had hoped, and we’re committed to the business.”

      There you have it. Now if only Wallet could get out the door to provide the incentivized, mobile payment experience the world has allegedly been waiting for, Google will be positioned to possibly expand its Wallet partner base in a market clogged with vendors vying for similar solutions.

      Most of those vendors will be credit card providers, who already have secure payment credibility. Some will be carriers; AT&T, Verizon and T-Mobile under Isis already have secured all major payment providers. Then there is PayPal, the ultimate online payment concern.

      Google Wallet has a tough road to blaze. But it must launch first.

      Clint Boulton

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