The Apple Pay for Android?

January 22, 2015 01:07 PM

Google Inc. launched its mobile payments and mobile wallet service Google Wallet in 2011 for consumers with Android mobile devices. It was met with a big “Eh” by consumers and hasn’t gained much traction.

Isis, a mobile payments and mobile wallet service now called Softcard, also launched in 2011 for consumers with Android mobile devices, backed by three major wireless carriers—AT&T, Verizon Wireless and T-Mobile. It was met with a big “Eh” by consumers and hasn’t gained much traction. (Is there an echo?)

Apple Inc. launched its mobile payments and mobile wallet service Apple Pay in 2014. It was treated by the media, the mobile payments industry and loyal Apple consumers as the Second Coming. Apple, the mobile trendsetter since launching its iPhone in 2007, managed to finally stir interest among consumers in paying for goods in-store via smartphone, bringing the concept of mobile payments into the mainstream.

This week, the mobile payments industry is abuzz with rumors that Google Inc. may be planning to acquire Softcard to join forces and bring a more potent mobile wallet to users of mobile devices running Google’s Android mobile operating system. Both Google and Softcard decline to comment.

Thad Peterson, senior analyst at Aite Group, a payments consulting firm that specializes in mobile payments, has heard from several sources within the payments industry that Google may indeed be making a move to buy Softcard, though he cannot reveal the identity of these sources.

“Google Wallet did not have the active involvement of the telecommunications companies, which were busy trying to get Isis/Softcard up and running and saw Google as a competitor,” Peterson says. “And there was limited interest in mobile payments from card issuers at the time. Plus, Near Field Communications wireless technology, which is used for mobile payments via smartphones in-store, hadn’t been adopted yet by Apple, the mobile trendsetter.”

Today, though, with the sudden surge of interest in paying via smartphone thanks to Apple’s high-profile offering, the time is right for an Android mobile wallet, Peterson says.

“There is a real opportunity for some company to step up and become the Apple Pay for Android,” he says. “There is simply no other organization in a position to seize that opportunity like a Google/Softcard integration. But there’s a lot to do before a Google solution is directly competitive with Apple. Unlike Apple, Google is dependent on third-party hardware providers that will need to get on the bus, and Google will need to make the acceptance process for merchants as seamless as it is with Apple Pay.”

Further, Apple Pay has raised the bar so high in terms of customer experience that Google will need to really dazzle Android users with a new mobile wallet, Peterson says.

“Apple Pay has the payment networks and card issuers on board, it has key merchants to merchandise the offering,” Peterson says. “It needs more NFC-enabled POS terminals, but those are coming quickly as more merchants upgrade their payment terminals to implement the EMV payments standard this year. So if Google can launch a viable Android offering, NFC-enabled mobile payments will explode in the next two to three years.”

Mark Ranta, senior solutions consultant at ACI Worldwide, a payments and mobile payments technology and services company, agrees.

“Softcard now comes preloaded on smartphones in the same way Apple Pay is preloaded on new iPhones,” Ranta says. “Softcard simply was in development for so long that it had limited availability and never took off. I think by combining Google’s payments expertise and reach with Softcard, Google could leverage the installed base and telecommunication company assistance that comes with Softcard to mount a concerted effort at a mobile payments solution. Google and Android will never have the apostle-like following that Apple has. However, what Google does have is sheer share of market. The Android mobile operating system is far more prevalent among consumers than the Apple iOS mobile operating system, especially when you look globally.”

Ranta predicts if Google acquires Softcard, consumers may see a renewed Google Wallet.

“A Google Wallet 2.0, if you will,” he says. “They did beat Apple to the market. Now they have a chance to tweak and update their offering to show the added value an updated Google Wallet brings to the table, such as peer-to-peer payments, special offers and more.”

While many research firms estimate that globally more than 80% of smartphones shipped by manufacturers run Google’s Android mobile operating system, U.S. mobile consumer behavior is an entirely different story. 52.6% of U.S. consumers accessing the mobile web and mobile apps on smartphones in November 2014 used Android phones while 41.8% used iPhones, according to web and mobile measurement firm comScore Inc.

Follow Bill Siwicki, editor of the 2015 Internet Retailer Mobile 500 and editor, mobile, at Internet Retailer, at @IRmcommerce and at @MobileInsiderBS.




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