“ In the past few thousand years, the way we pay has changed just three times—from coins, to paper money, to plastic cards.

Now we’re on the brink of the next big shift.”

These are the exact sentences that one could face at the site of the new buzz of the mobile payment industry, Google Wallet. As it was expected, Google has announced the development and launch of a service which could radically change the way people make payments nowadays. In simple terms, Google Wallet is an application that enables any users (with the appropriate provider and smart-phone device) to pay for their purchase without having to use any credit cards or other physical means of payment. The idea itself is indeed fascinating, however it is worth some paragraphs to analyze the importance and the background of such a promising initiative.

It is about time to innovate the payment industry and Google is just at the right place to do it. They not only have the expertise and knowledge in innovative change management but also happen to possess a well-established network of resources including their main power provider, the Android devices. Mixing the unsatisfied need for innovation with cutting edge technology, Google is about to take another step towards complete “domination”. The technique of Near Field Communication (NFC) makes it possible to establish a purely mobile based payment system that could enable Google to take a significant chunk of the market share. There are two things needed for the creation of such a network within any shop environment… a POS terminal and your smart-phone! All the rest is solved through wireless communication between the two devices. As an addition, one is able to own multiple accounts within one platform as well as incorporate other services. According to Google.com…

“loyalty cards, gift cards, receipts, boarding passes, tickets, even your keys will be seamlessly synced to your Google Wallet. And every offer and loyalty point will be redeemed automatically with a single tap via NFC.”

The real value of Google Wallet is its capabilities offered to merchants! …

“For merchants, Google’s NFC is the link to a seamless marketing campaign: Lure customers with special offers and then offer a smooth transition from promotion to “e-coupon” to purchase and payment.”

Fascinating, isn’t it?! It sounds logical, simple, fast and safe.

As you might see.. the above question is indeed ironic to a certain extent. Before jumping to premature conclusions let us have a look at the dark side of the story. At this point, one might wonder.. if NFC is such a highly demanded tool for innovation, how come it did not break in the market before? One of the main reasons for the modest success of the technology lies within the principles of basic consumer behavior. Consumers like to see things, touch things, feel things…etc .. consequently, not having a physical representation of their credit cards or their purchase could easily make them unsecure about the whole process. Not having anything tangible could and indeed will cause misperception. Whereas ‘plastic’ is well-known and universally understood, ‘thin air style’ payments are not. Due to this phenomenon, consumers seem to have little intention to change their purchasing habits and shift to payments through a contactless device. This can be identified as one of the big threats for Google and the success of its newly released  Wallet feature. Even though Google has recently announced that its Mobile Advertising Services (AdMob) is receiving 3,5 times as many requests as it did a year ago there are still some serious issues to take into consideration when forecasting the future success of the approach.

And it does seem to work! :

Google not only would have to face to increasing number of competitors on the market (Isis, a contactless payment alliance established by AT&T, T-Mobile, and Verizon not long before the launch of Google Wallet was published) but also has to tackle acquisitions and speculation assessing the major weaknesses of the product. The biggest drawback of the product could be the issue of security. Until know, Google could not certify its users that they are protected from such issues as ‘stolen or misplaced devices’. Their sole solution to the problem is to ‘cancel the users cards’ however that advice alone will not contribute to the popularity of their product. Apart from this major issue there are other questions to be answered :

What will happen to the existing payment system, network of old machinery and cards?

Can Google make advantage of its ’Android standard’ and obligate Android users to change their systems to the Google Wallet platform ?

And if so, would it raise the ever concerning issue of Google over-dominance?!

To conclude, this initiative could be one of the most lucrative investments int he field of payments. The fact that PayPal recently sued Google for idea theft – accusing them of stealing trade secrets and poaching employees – is just an other proof of extreme importance. No matter who is going to triumph in this war.. whoever does it will be able to create and own an open commerce ecosystem.. and that, my friends.. is ultimate power!

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