Keen to regain the initiative following the success of Apple Pay, Google has been busy in the first month of 2015. Rumored negotiations over the acquisition of Softcard point to a desire to reinvigorate the point of sale (POS) element of Wallet, while the launch of its Gmail-centric P2P service in the UK is its first major step into Europe. However, if Google’s aim is to build up a presence before the expected arrival of Apple Pay in Europe later this year, it will need to up its game.
Google needs to move Wallet beyond P2P if it wants growth
The beginning of 2015 has been busy for Google’s Wallet strategy, and necessarily so. The launch of Apple Pay and its initial success in terms of customer usage and market impact is in stark contrast to Google’s comparative failure to drive meaningful POS transaction volumes through Wallet. Indeed, as the Federal Reserve’s Consumers and Mobile Financial Services 2014 study showed in March last year, Google Wallet trailed some way behind both Starbucks and PayPal for customer mindshare in the US proximity payments space, even before Apple Pay came along.
The rumored acquisition of Softcard (formerly called Isis) – the troubled venture owned by AT&T, T-Mobile, and Verizon – would certainly be a shot in the arm for its US ambitions. However, although the telco-led platform coming together with Google has the potential to create a truly compelling offering for both merchants and consumers, there would be much to do first.
More crucially, Google has also announced the expansion of its Wallet product to Europe. Seeking to move into the market ahead of Apple, it is to offer UK-based Gmail users the ability to initiate a payment from their Google Wallet account to an email recipient by using an “attach money” feature. The service, mirroring the one live in the US since 2012, will be available only on desktop, and requires both parties to have a Google Wallet account.
However, this alone will worry few of Google’s competitors, least of all Apple.
Domestic P2P is a very small market compared to the wider retail payments space; it remains dominated by cash; and it is one in which few (if any) consumers pay for transactions. Furthermore, the UK already has two prominent and arguably more compelling P2P payment services in the form of Paym and Pingit. Both are mobile and free, settle in real time, and require only the mobile phone number of the recipient.
Although this play may see an increase in the number of Google Wallet subscribers, the size of this market means that any growth will be extremely limited. If Google is serious about payments and wants to take share in Europe, it will need to up its game, and fast.
Mobile Proximity Payments, IT0003-000632 (January 2015)
2015 Trends to Watch: Payments, IT0003-000628 (November 2014)
Kieran Hines, Practice Leader, Financial Service Technology