It’s Not About The Money

In May this year, Google announced its mobile wallet. It’s an Android app that lets people with Android phones equipped with near-field communication (NFC) technology pay for goods by simply tapping their handset on a special payment terminal. Field tests are underway in New York and San Francisco.

Initially, the app only works with a prepaid Citbank MasterCard at merchants that have the MasterCard PayPass terminals, (it’s a fairly big list), though eventually Google promises it will turn into the kind of open platform the company loves so well, working with any card or payment network.

Sounds a lot like what we keep hearing from Isis, the joint venture between AT&T, T-Mobile and Verizon to launch NFC payments in the U.S. But here’s the difference: at the end of the day, I don’t think this initiative is going to have anything to do with payment. We already have a lot of payment methods, and Google has already brought in MasterCard to handle that part. So if not payment, then what?

Rather than payment, I believe Google Wallet will be about creating an ecosystem to enable location-based marketing in the form of promotions, vouchers and coupons. You can bet the wallet be integrated with social networking in some way (surely, Google+, first and foremost). When you walk into a Macy’s, or past a Starbucks, those retailers will be able deliver offers straight to your phone: ‘10 percent off socks!’ ‘Buy one Trenta, get the second free!’

In other words, it’s mobile CRM. Google is about personalization, about profiling customers and delivering targeted ads. That’s why this is such an interesting play. Google wallet is big because we’re looking at a whole different level of advertising, a new breed of player starting to enter the mobile spectrum.

Co-operating operators
I mentioned above that the payment part of Google Wallet - tapping your NFC phone to an NFC terminal at the point of sale - sounds a lot like what we’ve been hearing about from Isis. As anyone in this industry will testify, it’s hard to get the operators to work together. They are seriously competitive with each other, and we’re seeing that play out now, as the way the big three have been presenting Isis has continued to change since the initial announcement. The reality is that every one of those operators has its own, independent payments initiative as well. In the end, I don’t believe that Isis will result in anything more than a proof-of-concept.

What we eventually need - in every country - is to bring the banks, operators and retailers together to create a mobile payments ecosystem. Now, if anyone can do that in the US, it’s Google. They have the dollars and the market reach.

At Sybase, our position has always been that with mobile payments in developed markets, there needs to be more value than just the payment mechanism, because we already have credit cards, direct debit, etc., and those methods work well. To change consumer behaviour, there has to be a compelling reason. You have to get something more. A great example of that is the paybox system in Austria. It provides added value, with services that go above and beyond. When you use paybox to pay for parking, for example, you get an SMS 10 minutes before your meter expires so you can top it up again if you like. A paybox-enabled vending machine uses the phone to identify the buyer’s age as well as to extract payment.

Google Wallet doesn’t deliver added value now, but I believe it will - and soon. Their website promises that eventually the wallet will hold “loyalty cards, gift cards, receipts, boarding passes, tickets, even your keys.” We’ll have to wait and see about the keys.

Matthew Talbot is SVP, Mobile Commerce, at Sybase 365