Mobile

In shadow of Android Pay, Google Wallet evolves to stay alive


Remember Google Wallet?

With all the fanfare surrounding Google’s new digital payments system, Android Pay, it’s easy to ignore the fact that Google already launched a different payments system — four years ago — called Google Wallet.

That earlier service was unceremoniously snubbed during the Google I/O developer conference Thursday, without any references to it during theAndroid Pay announcement at the event’s keynote presentation.

The slight is another reminder of Google Wallet’s long-time struggles to reach wider acceptance as a mobile payments system and an example of what can happen if a technology arrives too early to matter to consumers and businesses. But Google has quietly shifted gears on Wallet in a way that may keep it alive.

The world’s largest online search company now plans to reintroduce Google Wallet as an app that friends can use to transfer small payments — the digital equivalent to writing a check — available on both the Android and iOS operating systems.

The change may help breathe new life into Google Wallet, which never really took off with customers or retailers. It will also allow Google to differentiate the two mobile payment systems, since, right now, both Google Wallet and Android Pay would both share many of the same features, including the ability for users to make in-store payments with their smartphones and make purchases within mobile apps.

A key difference between them is that Android Pay — unlike Google Wallet — is an open platform that can be used to power third-party payment or loyalty-card apps created by banks or retailers, according to Vijay Koduri, an executive at payments processor Adyen and a former Google executive who helped launch Google Wallet. That should allow Android Pay, which will launch later this year, to worm itself more into the mobile-payments world.

Google Wallet debuted four years ago as an early player in mobile payments — the concept of letting people make secure online and in-store payments right from their smartphones. The service, along with other mobile-payments operators, may have been ahead of its time, as Google struggled to find carriers, device makers and retailers to support the new technology. Year after year, the tech industry predicted mobile payments would take off and people would start using their phones instead of their wallet. Yet year after year, consumer adoption failed to materialize, as the infrastructure to make the payments didn’t exist and — even when it did — consumers had little motivation to use something that wasn’t cash or plastic

“You need to give me a really good reason to move from something when what I have works for me,” said Carolina Milanesi, an analyst at Kantar Worldpanel, describing one of the many challenges Google Wallet has faced.

Osama Bedier, who helped run Google’s payments business and is now CEO of payment-terminals startup Poynt, said Google Wallet had a hard time building up partners, with its plans to work with wireless carriers falling apart after those companies pursued their own service.

That would be Isis, a joint venture started by Verizon Wireless, AT&T and T-Mobile, a similar mobile payments service that was later re-branded Softcard to distance itself from the terrorist group. In February, Google acquired Softcard’s technology, and shut the service down in March.

Even without the carriers, it was a challenge convincing both consumers and retailers to buy into the new system, Bedier said.

Despite the rocky start, momentum in the field jump-started after Apple — years late to the mobile payments space — last year said it would enable its new iPhones with the technology needed to make payments at point-of-sale terminals. About 72 hours after Apple Pay’s October debut, over 1 million credit cards had been activated on the service, more than other, similar services combined.

Now Google’s mobile payment efforts look to be on much better footing, thanks to the spread of new terminals that can accept mobile payments as well as the momentum from Apple Pay encouraging more use of the technology. Even so, mobile payments services are still struggling to gain adoption and haven’t reached mainstream use.

“Apple is making good traction, but it’s not great, with Apple Pay,” Bedier said.

Apple, for its part, has boasted that Apple Pay makes up $2 out of every $3 spent on purchases using contactless payment systems, which cover any device, including smart cards, that make payments wirelessly. Apple CEO Tim Cook has said 2015 “will be the year of Apple Pay.”

Despite a more favorable landscape, Google opted not to update Google Wallet but instead come out with a new brand, Android Pay. The new service emerges just months after Samsung rolled out its similarly named (and functioning) mobile payments system, Samsung Pay.

Kantar’s Milanesi said it was possible the Google Wallet name simply wasn’t new enough to inspire more user interest, after sitting around for four years with little use, so it made sense to go with a different name

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