Google has inked a distribution deal with the biggest wireless carriers in the U.S. to get the Google Wallet payments app pre-installed on their phones. At the same time, Google is buying technology from Softcard, the mobile payments app backed by the same carriers.
The deal will see Verizon Wireless, T-Mobile and AT&T pre-install Google Wallet on their Android phones in the U.S. later this year. Google Wallet allows shoppers to tap their phones to pay at checkout in some brick-and-mortar stores in much the same way Apple Pay does. The move also involves Google buying some intellectual property from Softcard, formerly known as ISIS. It doesn’t appear that any Softcard employees are joining Google as part of the deal.
In a blog post, Softcard said its users can use their mobile payments app for now. But I can’t imagine the wireless carriers behind the Softcard joint venture would agree to this deal if they planned to continue to invest in their own app. Sounds like game over for Softcard, a very expensive multi-year initiative that was essentially a flop for the wireless companies involved.
The partnership and purchase marks an ironic turn of events for all parties. One of the main reasons Google Wallet never took off as a tap-and-pay option in brick-and-mortar stores is because the wireless carriers had blocked the technology from working on their phones. Google started to work around that with a technology called HCE that grabs payment information from the cloud, which the carriers do not control.
For Google, the distribution agreement is also important because one of its phone partners, Samsung, is expected to announce its own mobile payments initiative next month. Samsung last week said it that it had acquired a payments startup called LoopPay, which Re/code reported in December was in talks to embed its own mobile payments tech into Samsung phones. While pre-installing Google Wallet on phones may boost usage, Google still has to give people good reasons to use the app rather than swiping their card.
It has been a wild six months in the mobile payments space. Besides the Google and Samsung deals, Apple launched its Apple Pay payment service that has lit a fire under the butts of Google, Samsung and a group of retailers led by Walmart that are working on their own payments app.
What’s at play? The big tech companies and carriers seem convinced that our phones will eventually replace our wallets. For carriers, that could make mobile wallet technology table stakes over the next few years as they compete for consumers. For Google, offering a well-received mobile payments technology could convince some Android phone owners from defecting to Apple. It also could give Google data on brick-and-mortar transactions, which still comprise the vast majority of all commerce and could be used to better target advertising to consumers. Read more…