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Google Wallet’s troubles mount as group head departs, physical card is dropped

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May 14, 2013

With Google Wallet’s head having recently left the company and speculation rampant that a rumored plastic Google Wallet card has been canceled, new questions are arising about just how well the search giant’s foray into mobile payments is faring.

Those questions may get some answers tomorrow when Google kicks off its annual conference for software developers, where it is expected the company will unveil an update for its digital wallet. Google Wallet faces growing competition in the mobile payments space from numerous other solutions also trying to lay groundwork is in the burgeoning market.

“Overall Google’s announcement isn’t a dramatic shock,” said Sam Maule, a manager at the Carlisle & Gallagher Consulting Group, Charlotte, NC. “Google has struggled with their Wallet solution and it is evident that change is in the air.

“Last week’s announcement that Osama Bedier was leaving Google to pursue other opportunities set the stage for the end of the physical card ‘patch plan,’” he said. “ The major hurdle Google faces is the support of only a single Telco – Sprint.

“The NFC requirement for their solution, along with the challenge faced by ISIS, must be addressed by Google in order to drive consumer adoption.  This, of course, combined with an actual desire by consumers to migrate to mobile wallets as their payment engine.”

Google did not respond to a request for comment.

Jury is out
Google Wallet faces numerous challenges.

For one thing, Google confirmed last week that Osama Bedier, the head of Google Wallet left the company recently. Mr. Bedier joined Google Wallet in 2011 from PayPal in a high-profile move that resulted in a law suit, with PayPal parent company eBay alleging that Google stole trade secrets.

Mr. Bedier’s departure does not come at a good time for Google Wallet, as digital wallets in general are not catching on as fast as expected since consumers and retailers have been slow to embrace a new way to make purchases.

In the case of Google Wallet and Isis, the slow adoption is partly a result of the fact that their solutions are based on near field communications technology, which is not widely available on smartphones yet.

“The jury remains out on Google’s solution as compared to Isis,” Mr. Maule said.

“The bigger question isn’t if Google is gaining traction on Isis,” he said. “Instead, the question is are mobile wallets as an overall concept gaining traction with consumers?

“We are still in the infancy stage of this payment evolution.”

Getting physical
While Google Wallet was launched to be a digital wallet that replaces the need for things like a physical wallet or physical credit cards, rumors about a plastic card for Google Wallet first surfaced last fall as it became increasingly apparent that the payments solution was not catching on with consumers.

PayPal already has a physical card for its digital wallet as a way to get more consumers to use the payments solution at the point-of-sale in retail outlets since many consumers are already comfortable using cards to make purchases. However, it has not had any significant impact on PayPal use.

Now it appears that if such a card had been in the works, Google has quickly scrapped them. However, this could simply signify a change in direction as opposed to a step back from Google’s commitment to mobile payments.

Google is expected to introduce an update of Google Wallet as its Google I/O conference this week which will supposedly contain new rewards, offers and loyalty points from a larger group of merchants but no physical card.

“Losing the physical card doesn’t mean that Google’s commitment to the wallet is wavering,” said Drew Sievers, co-founder and CEO of mFoundry, San Francisco.  “It just means that the strategy is evolving and they have one less form factor to consider.

“Neither the Google Wallet nor the ISIS Wallet are lighting the payments world on fire,” he said. “The payments industry is like a land war in Asia with a lot of entrenched forces that are difficult, if not impossible, to displace.

“I still don’t know what consumer problem the Google Wallet solves. A mobile wallet for technology’s sake isn’t a compelling proposition.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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