Authentication & Security

A Rough Road Ahead for Google Wallet?

MEDICIFounder and Chief Strategy & Innovation Officer

Google Wallet was launched more than 3 years ago and still hasn’t been able to make a mark in the mobile wallet space. One of the giants in tech has been backing this digital wallet service but we still don’t see it making waves in the payments industry. Some might even say whether Google still has high hopes for its Wallet service. Consider that Google Wallet was not among those 20 apps that Google made mandatory for mobile manufacturers to incorporate in handsets as part of Android certification - perhaps this is a result of blocking by the Softcard/Isis investor mobile operators, but the fact that it has not gained enough market leverage to push back on a dying Softcard is telling.

And then as compared to Apple Pay, Google Wallet has a lot of catching up to do to match the traction for Apple’s revolutionary mobile wallet service. Within a span of merely months, Apple Pay is making an impact on consumer behavior and merchant adoption, which has been a challenge for Google Wallet form the very beginning. Here are some aspects that become evident when we compare Apple Pay with Google Wallet:

  • Issuer Coverage: Apple Pay has well established partnerships with 31+ banks, 50+ merchants and 25+ apps (for in-app payments). Moreover, it now supports 90% of the payment cards that consumers in the US rely upon. Although Google Wallet has had established some partnerships from time to time but comparing the list, it’s clearly not as impressive as that of Apple Pay.
  • Tokenization: Security is the primary concern when it comes to mobile wallet adoption. Apple knows this and has implemented tokenization, encrypting the entire payment transaction data in the form of tokens. On the other hand, as cited by Google Wallet on its official FAQ page – “Google Wallet records information about your purchases, such as merchant, amount, date and time, method of payment, and, optionally, geo-location.” This can certainly makes consumers, and especially merchants, more skeptical of Google Wallet.
  • Touch ID: Since the launch of the iPhone 5S, Apple has been able to successfully promote its Touch ID technology broadly and effectively. Even the banking industry got attracted to its potential. Apple Pay seamlessly integrates Touch ID and brings an intuitive form of user authentication to consumers. Although Google Wallet did incorporate biometric features, it was only for its iOS app. This probably won’t make much of a difference, as iOS users will probably opt for Apple Pay.
  • Network Lifecycle Management: Thanks to its partnerships with banks, Apple Pay is able to securely control the entire payments experience from the back end. Apple has also put in place partnerships with some payment processors which show that Apple Pay has dedicated pipelines in the payments network infrastructure. Apple Pay is deeply embedded with the card networks and bank networks at an intimate level. This is something that Google Wallet lacks, with an approach that advocated “over the top” processing, as opposed to playing b the existing rules.
  • Ecosystem Approach: Google’s attitude to the payments space was always driven by technology innovation, and solving for an experience that had the potential of seamless integration into its other properties such as Search and Maps. Apple’s attitude seems to have been to suppress any of their own ambitions, for now, and play ball with the incumbents, while offering a sufficiently evolved experience to consumers. My be Google Wallet tried to do too much too soon as tripped up, while Apple is exposing just enough of its plans in the interest of supporting the existing ecosystem.
  • Organizational Focus: Since the initial launch of Google Wallet, there have been a handful of senior leadership changes at the organization, a few acquisitions that did not work out as intended, and general distraction as Google tried to work with the mobile operators. On the other hand, Apple has been hiring quietly and surgically for years and there appears to be general stability in the organization that allows for big things to happen with focus.

Google Wallet has been through the phase in which the industry had almost given up on use of NFC in mobile payments. Apple Pay turned out to be an influencer in this regard and there are a number of POS manufacturers who have actually started coming up with new NFC enabled POS systems as they witness the rising adoption of Apple Pay and NFC based payments on the whole. That is the level of impact that Google Wallet needs to attain in the market to make a strong comeback.

Google Wallet is indeed trying hard to bounce back. After some spiffy updates in July last year, Google Wallet added more features like splitting of payments, deeper bank account integration and others. Google Wallet has headed out of the US market as well and is now available for remittance service through Gmail in UK.

With NFC payments getting a booster dose, Google Wallet does have an opportunity ahead and overcoming the challenges should now be the top priority to ensure its relevance, and perhaps sruvival itself.

Amit Goel

MEDICIFounder and Chief Strategy & Innovation Officer

“Amit Goel is the Founder & Chief Strategy & Innovation Officer for MEDICI. Amit’s vision is to build a strong FinTech market network that involves financial institutions, banks, startups, investors, analysts & other key stakeholders across the ecosystem – helping each one of them in a meaningful way by removing the asymmetry of information and providing a platform to engage & transact.\ \ Amit is passionate about bringing actionable FinTech-focused insights, innovative products & services for the FinTech ecosystem. Some of his work involves startup scores, bank scores/assessments, predictive viewpoints & other innovations that have helped MEDICI’s customers and the ecosystem. He has been named amongst the Top 100 FinTech thought leaders/influencers in the world & Top 10 in Asia multiple times by reputed agencies, consulting firms as well as financial institutions. Amit has built MEDICI (formerly LTP) as a new-age, tech-enabled advisory/research firm, which is now considered the #1 global research & innovation platform for FinTech in the world.\ \ Amit has been writing pioneering viewpoints on financial technology space that have been ahead of the curve since 2010. His data-driven predictions have helped the customers as well as the ecosystem. His past work experience includes a strong background in strategy & market analysis and advisory to clients (from big business houses to Fortune 500 firms) in payments, commerce, financial services & IT/technology. In the past, Amit had also founded a successful consulting & research practice called GrowthPraxis and has worked at Boston Analytics, Frost & Sullivan, and Daimler Chrysler in strategy & research.”