follow the money

Google Reaches for Your Wallet

Posted by Sheila Shayon on May 26, 2011 04:00 PM

Last week, Google launched a new service, Google Advisor, to help consumers make money decisions and compare financial products: credit cards, CDs, checking, and savings accounts.

Today, the search giant unveiled its own financial product, Google Wallet, at a press conference in New York, with partners Citi, MasterCard, First Data and Sprint, sharing the stage.

Can Google Banking be far behind?

Google Wallet wasn't a huge surprise, despite yesterday's leaks. In March it emerged that Google was partnering with partnered with MasterCard and Citigroup to have the Nexus S Android smartphone, developed with Samsung, embedded with near-field communication (NFC) technology to enable purchases with a wave of the device across readers at the point-of-sale or check-out.

As promised, Google Wallet will turn your smartphone into your wallet through NFC swiping technology, and will initially support a Prepaid Google Card and Citi MasterCard. Just tap your phone to pay wherever MasterCard PayPass is accepted.

"Because Google Wallet is a mobile app, it will do more than a regular wallet ever could. You'll be able to store your credit cards, offers, loyalty cards and gift cards, but without the bulk," Google said in its announcement on its new Google Commerce blog. "When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you. Someday, even things like boarding passes, tickets, ID and keys could be stored in Google Wallet."

At the same time, Google's mobile consumers (and brands) can take advantage of the just-announced Google Offers, a Groupon and Facebook Deals rival being tested in Portland, Oregon, that will be redeemable at participating SingleTap merchants or by "tap and pay" PayPass merchants.

“With Google Wallet, we’re building an open commerce ecosystem, and we’re planning to develop APIs that will enable integration with numerous partners. In the beginning, Google Wallet will be compatible with Nexus S 4G by Google, available on Sprint. Over time, we plan on expanding support to more phones,” the Google blog post adds. 

Customer loyalty points from each merchant (including Bloomingdale's, the Container Store, Foot Locker, Jamba Juice, Macy's, RadioShack, Subway, Toys R Us, Coca-Cola vending machines and other partners) will automatically be added to your phone, and receipts delivered to your smartphone. Google also released a video featuring its launch retail partners today.

Google Wallet will launch in New York, San Francisco, Los Angeles, Chicago and Washington, D.C., and face competition from ISIS, a joint effort of AT&T, Verizon Wireless and T-Mobile USA, set to roll out in early 2012. 

For merchants, Google Wallet “represents true innovation,” said partner Citi, themselves “committed to leveraging this state of the art technology.” 

First Data North American president Ed Labry, as quoted by Mashable, commented at today's press conference, “It wasn’t a question of if, but when” regarding today’s announcement. “We house 700 million cards and card numbers on pieces of plastic,” which soon will all be stored on a piece of plastic in your phone.

The biggest payoff, according to GigaOm, will be “in serving up instant offers and acting as a loyalty card for retailer and merchants. By following a digital ad or offer all the way to point of sale, Google will be able to close the loop and determine the efficacy of these marketing efforts.”

Google says that Google Wallet is a first step in what will be an exponential surge of NFC apps, and that stickers applied to older Android phones will enable those devices to access a limited version of the app.

Google’s Osama Bedier elaborated that “Users will be able to obtain special NFC stickers with a single credit card associated with them (such stickers already exist, but these stickers will apparently be able to communicate with the Google Wallet app).”

 

 

As for how open Google Wallet will be beyond Android phone, “In terms of iPhone, RIM, Microsoft — we will partner with everyone,” Google VP of Commerce Stephanie Tilenius stated.

Google sees massive upside in enabling mobile payments, serving as a catalyst to traditional banks, credit card companies, wireless carriers and handset manufacturers in the gold-rush for targeted advertising and coupons on mobile. It's also not planning to take a cut of each transaction, but make money on the mobile ads, as the Wall Street Journal notes:

"Google says it isn’t going to take any revenue from the credit-card transactions themselves. Instead, it will be making money the old-fashioned Google way: advertising. Google will charge based on sales from its Offers discount system, and it will be able to use data to give people more relevant ads and offers, said Stephanie Tilenius, the vice president of commerce at Google.

'Assuming the consumer gives us permission we will have location data and will have transaction data to target ads to them,' she said, adding that transaction data doesn’t mean secure credit-card information. Consumers can also clear their transaction history from Google Wallet, the company says. As far as Google is concerned, credit card payments are only the beginning. 'What else do you have in your wallet — maybe a drivers license, a health care card? Eventually you’ll be able to put everything in your Google Wallet,' Ms. Tilenius said."

Privacy concerns, naturally, are already arising. ITworld imagines how Google could mine the data it has access to by enabling each contactless payment transaction:

"Google could take that information and, via its new Google Offers service, send you a coupon for your next purchase. Or Google could use its AdMob subsidiary to send your phone ads for competing products like Corona and Fritos. (And Apple, which will surely offer NFC payments at some point for the iPhone and iPad, could do the same with its Quattro mobile ad service.) This type of thing already happens in a limited way with supermarket frequent shopper cards; soon it will happen with everything."

As Google seeks to "organize the world's information," one area Google itself may need help is when it comes to naming its ever-expanding array of products. SEO marketer Joanna Lord tweeted after today's announcement, "Google... seriously who is naming your new products? Google Wallet. really? really? oy."

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