Verizon May Say No: Where Does This Leave Google Wallet?
by Karen Webster
Couldn’t resist the opportunity to weigh in, briefly, on the story that had the Web in an uproar yesterday. Seems as though Verizon may be giving Google the proverbial lump of coal a little early this year by saying ixnay to its Wallet. (Read Verizon's latest statement.) Now, having the largest mobile operator in the US make that call is pretty big. It would certainly limit Google Wallet’s distribution possibilities a whole lot in the US.
The “talking points” are all about security, but my take is that it isn’t really about that at all. It’s a battle over the Secure Element. It is about security, certainly, but is also about control – control over who has access to their customers and the services they are provided. Google has its Secure Element, in fact, and wants it to become the standard for NFC (which is lacking today) That, naturally, means it won’t use Verizon’s. That also means that Verizon isn’t able to lock in Google Wallet customers in any way, including through any sort of financial arrangement/rev share. (Related: Handicapping PayPal in its Mobile Race with Google and Others)
So, where would that leave Google? Well, as the saying goes, there are other fish in the sea, and they’ll sure need them. Sprint was fine for a test, but isn’t enough for Google to scale. Google’s mobile payments strategy, a wallet on a chip in a phone, by design unfortunately for them, also means that an operator is very much in the mix. It’s a fatal flaw in the whole NFC mobile payments scheme and is why my view of success with mobile payments, consistently, has been about mobile wallets that live in the cloud, far, far away and completely disassociated from mobile operators. That approach means that wallets can follow consumers regardless of which handset or operator a consumer decides they want to use and a service provider wants to enable. The gating factor in this scenario is getting the consumer to say yes, which is still hard. If anyone needed any more evidence as to the merits of such a mobile payments/wallet strategy, then look no further than this news story. It will surely be interesting to see how this all ends up.
Karen Webster is the CEO of Market Platform Dynamics (MPD), a consulting firm that helps companies find, implement and monetize innovation. She serves as an advisor and member of the board for a number of companies operating in the payment, technology and digital media industries. More info here.
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Very interesting battle going on here. NFC and mobile wallet technology appears to be the wave of the future and Google definitely has a leg up here in the US. However, that is quite the roadblock if Verizon says no.
My hunch says Verizon will play hardball for a while but will eventually jump on board once their competitors do. It is hard for a telecom company to create the security standard because their competitors are very unlikely to use it.
Posted by Eric Stauffer, 07/12/2011 3:01pm (6 months ago)
This reminds me of 4 years ago, when Verizon wanted to control mobile banking access (banks were a sub menu on the Verizon / Firethorn mobile banking app.) In the end openness prevailed as smart phones dominated the market and feature phones that Verizon could control become irrelevant.
I see the same pattern here - to begin with they will try to control and lock down access to the SE (and in doing so try to give ISIS some time to catch up...(maybe even launch) with Google wallet. But over time they will be forced to bow to conusmer demand and allow Google Wallet one of the SE slots along with the ISIS solution. Will be interesting to see fi they can still charge some sort of fee for SE access.
Posted by Cameron Franks, 07/12/2011 12:44pm (6 months ago)
Cloud wallets are fine, but not suitable for serving the global mass market (ie 90% of the people, not only 10 to 20%) :
- too expensive for many ! yeah, wallet is free, ad sponsored or so, but the smartphone isn't free, neither the data rate plan... and many people can't afford them, while they'll be able to afford less sophisticated phones susbdidized by the MNOs
- too complicated for many : not everybody is able to register to an online wallet, to use a touch phone to make an online purchase while in a store, etc... Many people still prefer a less sophisticated phone : without a wallet, but with simple NFC services (just tap)
- online security is too weak without strong authentication (and then becomes too clumsy) for large scale mass market payment services
You can't beat the simplicity of NFC.
You can't beat the sensation of control it gives to the user. And the security is state of the art.
When you move outside of the online world, you need a distribution network for your products and services, you need a countrywide support infrastructure to help your customers.
You need local action capabilities.
That's what bring MNOs in the value chain.
Posted by bpx, 07/12/2011 10:17am (6 months ago)
Karen-
You are right. NFC is complicating the issue exponentially. mWallets overseas live in the cloud very nicely to the tune of over 100M now
Posted by Tom Meredith, 07/12/2011 8:34am (6 months ago)
Already available on the Android market, Blackberry market and iTunes, the CSI globalVCard is free to download. Businesses can use this mobile to send one-time use MasterCard credit card numbers and have the option to restrict who can use it, where they can use it and for how much. Check it out here - www.youtube.com/user/CSIVirtualCard
Posted by Kara Koepsell, 07/12/2011 8:26am (6 months ago)
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