A few years back, Google Wallet 1.0 died at the hands of Verizon, AT&T, and T-Mobile. But recent rumors have it that Google is on its way to acquiring the very company that caused Wallet 1.0’s downfall, Softcard.
The Years-Long Feud Comes to An End
When Google Wallet 1.0 first came out, mobile carriers blocked it and came out with their own payment system. Softcard – then known as ISIS and re-branded for pretty clear reasons – was their response.
Several tech journalists predicted that Softcard would fail…which it did. Earlier this month, the company laid of 60 employees and has been consolidating its workforce.
Rumors have been circulating that the company was acquiring Softcard for less than $100 million. But when asked about these speculations, Google replied, “We don’t have a comment, background, deep background, off the record steer, nod, wink or any other verbal or non-verbal response…”
According to Softcard, there are over 200,000 merchants that can accept payments with the app.
So why is Google acquiring the company that caused Google Wallet 1.0 to go bust? This is likely more than a stab at revenge…
Many speculate that Google is after patents. Softcard has over 120 patents in all. The company also has established relationships with joint venture carriers and retail channels. In all probability, Google is after both.
According to TechCrunch sources, morale at the company has been pretty low recently. If anything, however, morale should be on the upswing.
The future of mobile payments is looking bright.
Where Google Wallet Failed, Apple Pay May Succeed
As with every new form of technology, mobile payments have been slow to take off. Past surveys of consumers have revealed that the major concern used to be security. Previously, in-app payments – through Uber and the Starbucks app, for instance – have been more popular.
Perhaps this has to do with the security concern. But Apple Pay may pave the way towards a mobile wallet-powered future. Why can Apple Pay succeed where Google Wallet has failed?
A few reasons:
- It never suffered the competition that Google Wallet 1.0 did. Softcard and the mobile carriers’ resistance ended up causing Google Wallet 1.0’s failure. Though slow to take off, Apple Pay never suffered the debilitating competition. So with its own little mobile ecosystem, it has been allowed to grow…albeit very slowly.
But that may change in 2015.
- Apple Pay is secure and people are starting to realize that. Both Google Wallet and Apple Pay use similar, secure technology to process user payments. And many have come out and openly said that this near-field communications (NFC) technology is even more secure than credit cards. And with the support of major credit card companies such as Visa and MasterCard, some feel that this is a sea change away from previous security concerns.
- More importantly, Apple Pay doesn’t look at users’ purchase information. Google Wallet, on the other hand, does. And that makes this a major selling point for Apple Pay. According to Eddy Cue, Apple’s senior vice president, “Apple doesn't know what you bought, where you bought it, or how much you paid for it.”
Sounds pretty good for Apple. But there are a couple limiting factors…
One is the fact that Apple Pay will only be available through the latest Apple Devices. This may be incorporated into the company’s marketing strategy – an incentive for people to buy the latest Apple technology.
But it will, by definition, drive away customers who can’t afford this technology. In the same way that Android caters to lower-income demographics, future incarnations of Google Wallet will also end up catering to those demographics.
The Future of Mobile Payments
The future is looking good.
Security professionals generally agree that mobile payment systems are more secure than credit cards and debit cards.
Why? The older credit and debit cards rely on software-based security systems. And software can be hacked. By contrast, Apple Pay is actually a hardware-based security system. The system employs a two-part security measure that relies first on the fingerprint and second on a secure chip. This chip stores a person’s financial information and is completely separate from the iPhone’s software.
So it can’t be hacked.
Many people’s previous objections to mobile payments are slowly fading away. With improved security and a greater awareness of the benefits of mobile payments, people will be more likely to adopt them in the future.
Though Google Wallet may rise up from the ashes in the future, it appears that Apple Pay will make an impact first.