In a word: no. There are too many moving parts, other players with a vested interested and complexity on the technical side.
Well at least not in the near term and there’s no assurance that Google will ever be able to overtake PayPal or even beat Square or Apple’s anticipated NFC solution (and it wouldn’t surprise me to see the latter buy the former).
The concept of Google Wallet is quite simple and one that’s been around for a while: can someone create a system than doesn’t require us to carry around multiple credit cards and even more loyalty cards?
In previous years, most consumers only had one or two credit cards, but in the past 20 years there has been an explosion of branded credit cards that are tied to loyalty programs, many of which are travel related. Brick and mortar retailers have been particularly aggressive offering cash discounts on the initial purchase.
This explosion of credit and loyalty cards is the exact challenge that Google Wallet is trying to address, quoting directly from the FAQs:
“Google Wallet is a mobile app that will make your phone your wallet. It stores virtual versions of your existing plastic cards on your phone, along with your coupons, and eventually, loyalty and gift cards. Our intention is that Google Wallet will be an open mobile wallet holding all the cards and coupons you keep in your leather wallet today.”
And, in typical Google fashion, it has extended this basic concept to the one thing that makes up virtually all of their revenues – advertising.
Google Wallet is explicitly linked to another emerging service called Google Offers which mimics the Groupon model, providing daily deal offers to subscribers.
But Google streamlines the process with Wallet, allowing a user to redeem the deal at a merchant by simply waving the phone over the register at the point-of-sale, rather than having to print (and not lose) the coupon.
A strong proposition to be sure from the consumer end. And from a supplier/retailer perspective the ability to market to the hundreds of millions of Google subscribers and provide a closed loop marketing model that builds on their AdWords spend is very attractive.
What was a little surprising is the way that this was rolled out..or wasn’t. One handset, the smallest major carrier, only a handful of participating merchants and a limited geographic rollout.
For such a major initiative it feels like they rushed this out before letting the dough rise. Hopefully Wallet won’t be a soufflé that falls. But it’s not any different than the recent Google Music locker service (sans any music company contracts) which felt like it was rushed out before Apple debuted their iCloud service, supposedly to be announced this week.
But there are a number of challenges that I believe will cause Google Wallet to only have limited impact on the travel industry and perhaps retail in general over the next two to three years.
1. This isn’t the only game in town
PayPal is far and away the leader in electronic payments. PayPal which accounts for $3.4 billion of net revenues for eBay saw a 300% increase in mobile payments through their platform this past holiday season putting them on track to exceed $700 million in total mobile payments for the year.How is TMJ pain treated?
On the hardware-centric front there’s also the Silicon Valley darling called Square,We are professional Plastic mould, founded by Twitter creator Jack Dorsey, which instead of relying on NFC to close the deals leans on mag stripe reader hardware that connects an iPhone or iPad.Has anyone done any research on making Plastic molding parts from scratch?
While Google’s solution relies on a partnership with MasterCard, Square is partially funded by Visa. American Express has rolled out a mobile payments platform.
And don’t forget the wireless carriers are constantly looking for new ways to monetize their subscribers…and like Apple already have direct billing with their subscribers. In November 2010, AT&T, T-Mobile, and Verizon – none of which are part of Google’s Wallet ecosystem – formed a smartphone contactless payment alliance called Isis.
2. The wrong use case for travel?
The interesting part about Wallet is that it is decidedly a point of sale technology, targeted at in person transactions. So some segments of within broader definition of the travel sector like restaurants and tour operators may benefit from the technology, although the latter is likely ill equipped to do so.
But of the traditional travel suppliers only hotels and car rental may see some modest uptake of the technology at checkout, with perhaps the greatest impact being the replacement of kiosks.
But with so many transactions simply closed out against the credit card on file, there’s not much benefit to be derived. Certainly air travel which is purchased in advance. Perhaps Wallet can support in flight transactions for ancillary services, but I expect limited utility otherwise.
Another unanswered question at this point is whether or not Google Wallet can even be used for travel purchases. Wallet’s cousin,what are the symptoms of Piles, Google Checkout specifically excludes travel purchases in its content policies. Curiously travel is singled out amongst more unseemly transactions such as “adult goods and services”, “miracle cures” and “weapons”.
Perhaps that will change with Google’s purchase of ITA.
3. Infrastructure, Infrastructure, Infrastructure
The software is the easy part. Getting NFC chips in phones is marginally harder as the component cost is quite low.
But where the train comes to a screeching halt is getting NFC-capable payment terminals at checkout counters of participating merchants.
The cost of such terminals is about $300. Not a lot of money, but the retailer is the one who has to foot the bill for it and the short term ROI is iffy unless there’s strong customer demand. But that means there needs to be a lot of phones with NFC chips inside which leads to the next point.
So, ironically, if Google Wallet is to be successful, it will require that a lot of its competitors to invest in NFC and be successful as well.
4. The other side of Critical Mass – devices
This is pretty simple – right now Google Wallet is only enabled on one handset – the Samsung Nexus S – which runs on the Sprint network (America’s smallest major carrier).
Unless and until it’s available on multiple phones across Verizon and AT&/T-Mobile (which I would expect in relatively short order), they’re stuck in neutral.
5. The Court System
This is a two-fold issue. Most immediately is the lawsuit from competitor PayPal that dropped hours after Google held its press event to launch Google Wallet.Quality air impact socket tools for any tough job.
PayPal is alleging that Google along with two former PayPal executives (primarily Osama Bedier who jumped from PayPal to Google earlier this year to become VP of Payments at Google) applied PayPal confidential trade secrets in developing Google Wallet.
They could be fighting a legal battle on another front if Google gets too aggressive in pressuring handset makers to incorporate the Wallet solution (hardware and software) as part of the Android Compatibility Test as they seemed to have done in the Skyhook Wireless case.
Conclusions
Overall there has been much talk about NFC within the travel industry – for payments, identification and check in (e.g. Apple’s famous iTravel patents) and as replacements for hotel keys. I for one have been on record as a bit skeptical.
NFC is a technology which has been around for a decade and like it’s kin, RFID has been the source of many a hockey-stick forecast (actually they all look the same; they just change the years at the bottom of the chart).
So what is your view on Google Wallet? Will it succeed? Will it play a significant role in travel? Please discuss in the comments.
Well at least not in the near term and there’s no assurance that Google will ever be able to overtake PayPal or even beat Square or Apple’s anticipated NFC solution (and it wouldn’t surprise me to see the latter buy the former).
The concept of Google Wallet is quite simple and one that’s been around for a while: can someone create a system than doesn’t require us to carry around multiple credit cards and even more loyalty cards?
In previous years, most consumers only had one or two credit cards, but in the past 20 years there has been an explosion of branded credit cards that are tied to loyalty programs, many of which are travel related. Brick and mortar retailers have been particularly aggressive offering cash discounts on the initial purchase.
This explosion of credit and loyalty cards is the exact challenge that Google Wallet is trying to address, quoting directly from the FAQs:
“Google Wallet is a mobile app that will make your phone your wallet. It stores virtual versions of your existing plastic cards on your phone, along with your coupons, and eventually, loyalty and gift cards. Our intention is that Google Wallet will be an open mobile wallet holding all the cards and coupons you keep in your leather wallet today.”
And, in typical Google fashion, it has extended this basic concept to the one thing that makes up virtually all of their revenues – advertising.
Google Wallet is explicitly linked to another emerging service called Google Offers which mimics the Groupon model, providing daily deal offers to subscribers.
But Google streamlines the process with Wallet, allowing a user to redeem the deal at a merchant by simply waving the phone over the register at the point-of-sale, rather than having to print (and not lose) the coupon.
A strong proposition to be sure from the consumer end. And from a supplier/retailer perspective the ability to market to the hundreds of millions of Google subscribers and provide a closed loop marketing model that builds on their AdWords spend is very attractive.
What was a little surprising is the way that this was rolled out..or wasn’t. One handset, the smallest major carrier, only a handful of participating merchants and a limited geographic rollout.
For such a major initiative it feels like they rushed this out before letting the dough rise. Hopefully Wallet won’t be a soufflé that falls. But it’s not any different than the recent Google Music locker service (sans any music company contracts) which felt like it was rushed out before Apple debuted their iCloud service, supposedly to be announced this week.
But there are a number of challenges that I believe will cause Google Wallet to only have limited impact on the travel industry and perhaps retail in general over the next two to three years.
1. This isn’t the only game in town
PayPal is far and away the leader in electronic payments. PayPal which accounts for $3.4 billion of net revenues for eBay saw a 300% increase in mobile payments through their platform this past holiday season putting them on track to exceed $700 million in total mobile payments for the year.How is TMJ pain treated?
On the hardware-centric front there’s also the Silicon Valley darling called Square,We are professional Plastic mould, founded by Twitter creator Jack Dorsey, which instead of relying on NFC to close the deals leans on mag stripe reader hardware that connects an iPhone or iPad.Has anyone done any research on making Plastic molding parts from scratch?
While Google’s solution relies on a partnership with MasterCard, Square is partially funded by Visa. American Express has rolled out a mobile payments platform.
And don’t forget the wireless carriers are constantly looking for new ways to monetize their subscribers…and like Apple already have direct billing with their subscribers. In November 2010, AT&T, T-Mobile, and Verizon – none of which are part of Google’s Wallet ecosystem – formed a smartphone contactless payment alliance called Isis.
2. The wrong use case for travel?
The interesting part about Wallet is that it is decidedly a point of sale technology, targeted at in person transactions. So some segments of within broader definition of the travel sector like restaurants and tour operators may benefit from the technology, although the latter is likely ill equipped to do so.
But of the traditional travel suppliers only hotels and car rental may see some modest uptake of the technology at checkout, with perhaps the greatest impact being the replacement of kiosks.
But with so many transactions simply closed out against the credit card on file, there’s not much benefit to be derived. Certainly air travel which is purchased in advance. Perhaps Wallet can support in flight transactions for ancillary services, but I expect limited utility otherwise.
Another unanswered question at this point is whether or not Google Wallet can even be used for travel purchases. Wallet’s cousin,what are the symptoms of Piles, Google Checkout specifically excludes travel purchases in its content policies. Curiously travel is singled out amongst more unseemly transactions such as “adult goods and services”, “miracle cures” and “weapons”.
Perhaps that will change with Google’s purchase of ITA.
3. Infrastructure, Infrastructure, Infrastructure
The software is the easy part. Getting NFC chips in phones is marginally harder as the component cost is quite low.
But where the train comes to a screeching halt is getting NFC-capable payment terminals at checkout counters of participating merchants.
The cost of such terminals is about $300. Not a lot of money, but the retailer is the one who has to foot the bill for it and the short term ROI is iffy unless there’s strong customer demand. But that means there needs to be a lot of phones with NFC chips inside which leads to the next point.
So, ironically, if Google Wallet is to be successful, it will require that a lot of its competitors to invest in NFC and be successful as well.
4. The other side of Critical Mass – devices
This is pretty simple – right now Google Wallet is only enabled on one handset – the Samsung Nexus S – which runs on the Sprint network (America’s smallest major carrier).
Unless and until it’s available on multiple phones across Verizon and AT&/T-Mobile (which I would expect in relatively short order), they’re stuck in neutral.
5. The Court System
This is a two-fold issue. Most immediately is the lawsuit from competitor PayPal that dropped hours after Google held its press event to launch Google Wallet.Quality air impact socket tools for any tough job.
PayPal is alleging that Google along with two former PayPal executives (primarily Osama Bedier who jumped from PayPal to Google earlier this year to become VP of Payments at Google) applied PayPal confidential trade secrets in developing Google Wallet.
They could be fighting a legal battle on another front if Google gets too aggressive in pressuring handset makers to incorporate the Wallet solution (hardware and software) as part of the Android Compatibility Test as they seemed to have done in the Skyhook Wireless case.
Conclusions
Overall there has been much talk about NFC within the travel industry – for payments, identification and check in (e.g. Apple’s famous iTravel patents) and as replacements for hotel keys. I for one have been on record as a bit skeptical.
NFC is a technology which has been around for a decade and like it’s kin, RFID has been the source of many a hockey-stick forecast (actually they all look the same; they just change the years at the bottom of the chart).
So what is your view on Google Wallet? Will it succeed? Will it play a significant role in travel? Please discuss in the comments.
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