Tuesday, June 7, 2011

Google Wallet – The Industry Changing App

Google recently announced the launch of Google Wallet, the new point of sale payment app.  This cool Android app was launched by Google together with Citi Bank, MasterCard, First Data, Sprint  and some big name retailers.  This app is all set to revolutionize the dizzy world of payment technologies. 

No more bulky wallets with so many cards – the debit card, the reward cards, the airline cards ; You can also use coupons and other discounts at check out.  Wow, what a relief to have all these rolled into one app on your cell phone.  

Right now, the app will run on Android only.  However, given the size of the payments business, it is not hard to foresee that Google will enable the app on iPhones and Blackberry in the coming months.

According to Google, the Wallet app incorporates sever security features including PIN requirement before payment as well as the encryption of MasterCard’s PayPass technology.  Industry pundits   seem to have different views on this. But that’s beside the point.   How will this impact the payment industry? 

Ø  Definitely it is going to smoothen customers’ shopping and payment experience.  Paying at the checkout will never be the same again. I would expect the younger population segments to adapt quicker to this mobile payment technology. The older generation and baby boomers may not be far behind, though.

Ø  The credit card majors are nervously watching this development.  I think Google is just a step away from launching its own card business, or shall we say mobile payment business.  Banks get a share of the revenue Retailers generate from their rewards programs. This revenue share or at least parts of it for a start could now be up for grabs.  It will certainly eat into the profit margins in an already troubled credit card industry. 

Ø  Google Wallet has the potential to realign payment industry. The coming months should see clearer battle lines drawn between Google and friends on one side and the big boys of banking on the other side. They will be fighting for the consumer’s wallet share. Consequence - Most banks will be forced to invest in mobile technology to protect their customer base and market share and will offer huge opportunities for MicroStrategy on a platter

Ø  Will Google Wallet cause the disappearance of the plastic card? Don’t think so. While it is too early to predict how this will impact the plastics, I certainly think that the usage will start declining. I don’t think it would disappear altogether in the near future.  Well, you never know and I could be horribly off the mark.

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