Google Wallet’s Roller-Coaster 2012

The bumpy path that Google Wallet followed this past year has shaken faith in the viability of a mobile payment system that uses NFC technology to facilitate point-of-sale payments. A key problem for Google was persuading card brands and issuers to get on board as partners, with no other issuers apart from Citigroup working with Google Wallet until Google implemented basic alterations in its relationships with such entities. Originally, issuers were permitted to place card data securely on the mobile phone, but integration was long and arduous, and in August Google cleared an option to instead allow linked cards to fund a virtual MasterCard. Furthermore, Google transferred the card data from the secure element in the phone to cloud-based storage, and also started phasing out a Google-branded virtual prepaid account connected to its wallet app. Google is now rumored to be developing a plastic card that would use Discover Financial Services’ network rails for POS transactions, and TowerGroup analyst Brian Riley considers this to be a step back for Google Wallet. “We don’t know if they will really get it [a plastic card] out in the field, but it could just be like another PayPal prepaid card out there to function at the point of sale,” he says. All NFC-enabled mobile wallets are confronted with a dearth of available handsets with the technology built in, and Google additionally faced little support from major carriers. “The year 2013 shapes up to be fairly interesting because Google and PayPal have goals to establish POS brand[s with plastic cards] and incorporate their value-added services,” says Aite Group analyst Richard Oglesby.

[divide]

From “Google Wallet’s Roller-Coaster 2012”
American Banker (12/27/12) Heun, David