So yesterday I was thinking that it’s not worth talking about Google’s announcement of a mobile wallet as it’s been covered everywhere.
But to not mention it on the blog would be a serious loss of duty so, in answer to my question, it's BIG news.
In fact, it's VERY BIG.
This is no surprise as, back in March, I mentioned that Google had hired Osama Bedier from PayPal to lead their 400-strong payments unit.
What is their announcement?
From the Google mobile blog:
“Today in our New York City office, along with Citi, MasterCard, First Data and Sprint, we gave a demo of Google Wallet, an app that will make your phone your wallet. You’ll be able to tap, pay and save using your phone and near field communication (NFC). We’re field testing Google Wallet now and plan to release it soon.
“Google Wallet is a key part of our ongoing effort to improve shopping for both businesses and consumers. It’s aimed at making it easier for you to pay for and save on the goods you want, while giving merchants more ways to offer coupons and loyalty programs to customers, as well as bridging the gap between online and offline commerce.
“Because Google Wallet is a mobile app, it will do more than a regular wallet ever could. You'll be able to store your credit cards, offers, loyalty cards and gift cards, but without the bulk. When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you. Someday, even things like boarding passes, tickets, ID and keys could be stored in Google Wallet.
“At first, Google Wallet will support both Citi MasterCard and a Google Prepaid Card, which you’ll be able to fund with almost any payment card. From the outset, you’ll be able to tap your phone to pay wherever MasterCard PayPass is accepted. Google Wallet will also sync your Google Offers, which you’ll be able to redeem via NFC at participating SingleTap™ merchants, or by showing the barcode as you check out. Many merchants are working to integrate their offers and loyalty programs with Google Wallet.
“With Google Wallet, we’re building an open commerce ecosystem, and we’re planning to develop APIs that will enable integration with numerous partners. In the beginning, Google Wallet will be compatible with Nexus S 4G by Google, available on Sprint. Over time, we plan on expanding support to more phones.
“To learn more please visit our Google Wallet website at www.google.com/wallet.”
The strategy is pretty interesting too, as it’s all based around taking on Groupon in terms of offers and coupons:
“When you use a credit card via Google Wallet, Google will not charge a transaction fee. Instead, it hopes to make money via ads (surprise, surprise) and via Google Offers.
“Google will be offering prepaid Google Mastercards which you can re-charge with funds from another card or bank account using an online interface. When you sign up for a Google Prepaid Card, they'll deposit $10.00 free into your prepaid account, which is a nice gesture.
“Google Offers will tie in with Google Wallet, sending you an "offer of the day" that you can take advantage of by paying with your Google Wallet. Your Google Offers sync between your computer and your phone, and will save you money on return visits to a restaurant or store.
“As far as retail partners, Macy’s, Subway, Walgreens, and Toys R Us will be the first to support Google Wallet using NFC readers and Offers.”
Google Wallet will be accepted in over 124,000 PayPass-enabled merchants nationally and more than 311,000 globally and the reason they are doing this is that they truly believe in a contactless future: “by 2014, 50% of smartphones will have NFC chips embedded inside”.
Having said that, the wallet only works on NFC-enabled Android phones to start with, which means purely the Nexus S handset at this stage. For non-NFC phones however, Google have launched stickers: “users will be able to obtain special NFC stickers with a single credit card associated with them (such stickers already exist, but these stickers will apparently be able to communicate with the Google Wallet app). It sounds like transactions made using the sticker will be relayed to the Wallet application on your Android device via the cloud.”
The news of the new service immediately hit the blogosphere, and also the radar of Visa and PayPal.
Visa are unsurprisingly unimpressed as Google partnered MasterCard for the launch. On their blog, they say “that launching NFC payments in the US this year was just one small aspect of our recent announcement regarding Visa’s plan to provide a global, comprehensive solution enabling consumers to transact wherever, whenever by using a card, a computer or a mobile device which kicks off later this year.”
They also remind us that they are working in partnership with Bank of America, Chase, US Bank and Wells Fargo, not just one bank (Citibank).
PayPal are even more unimpressed as Google snatched their head of mobile, Osama Bedier, back in January. So, they are suing Google “over claims it misappropriated trade secrets from PayPal’s mobile-payment business” by hiring Osama. If you’re that interested you can download the PDF of the whole PayPal writ by clicking here.
All in all, a busy day in the world of payments or, as Paul Galant the CEO for Global Enterprise Payments at Citibank put it at yesterday’s launch: “This collaboration brings to life CEO Vikram Pandit’s vision for Citi to be the world’s digital bank” and “will be looked at as the inflection point for mobile payments evolution from concept to mass consumer adoption.”