Learning to Play Nice With NFC

12:10 PM -- Google (Nasdaq: GOOG) may be learning that when it comes to mobile payments, it can't beat the wireless operators, so it might as well join them.

According to a report on Bloomberg Thursday, Google's Near-Field Communications (NFC) Wallet venture isn't going so well. Consumers aren't cutting up their credit cards in favor of the phone and the company has lost two key managers in recent months.

The main reason is that it doesn't have widespread support in the operator community. In fact, Google Wallet is so far only available on two Sprint Corp. (NYSE: S) phones. The company tried to branch out to Verizon Wireless , but was blocked by the carrier, who opted to promote its still-to-be-launched Isis banking service instead. (See NFC to Come Standard in Sprint LTE Phones, Verizon Blocking Google Wallet? Poor Decision, Google Taps Sprint for Tap-to-Pay and US Carriers Combine Mobile Wallets.)

Giving the wireless operators a reason to preload Wallet may be Google's best bet if it wants its service to take off. In fact, it's the best bet for any service at all to take off.

The mCommerce ecosystem is -- and will continue to be -- made up of many players who all want a cut of the pie. Sure, this dynamic reduces revenues for all, but it's also the only way to make it work. If Google offered Verizon a cut of the money it makes from advertising and promos, I bet the carrier would have welcomed it with open arms. (See Making Money on Mobile Money.)

In a Light Reading survey, we found out that less than half of our survey respondents have ever made a mobile payment and that's factoring in payments made on the phone and not just with it. (See Light Reading's 2012 Mobile Life Survey.)

So, there's clearly still a lot of work to be done on mobile payments. Many consumers simply don't have an issue with carrying a credit card, but more likely aren't aware of the service, perhaps don't trust its security or don't have a compatible phone. (See How Secure Is Your Google Wallet?)

These are all things that could start to change, but only by working together.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

sarahthomas1011 12/5/2012 | 5:38:30 PM
re: Learning to Play Nice With NFC

Google's other option would be to get so many merchants on board that the carriers can't afford to ignore it. A brand like Google (or Apple if it wants to...) should have the power to do that. Either way, they'll have to work together.

jdbower 12/5/2012 | 5:38:26 PM
re: Learning to Play Nice With NFC

From my perspective it's the merchants who are the limiting factor. With Google's GroupOn clone you'd think they could throw in a kicker that putting up a coupon on Google Offers nets you a free PayPass reader if you already accept credit cards.  Or perhaps commission a mobile device like the wireless terminals Legal Seafood uses to help facilitate things.

Limiting it to largely a pre-paid card I thought would be annoying, but it's not as bad as I thought and limits the loss I'd incur if something were to go wrong.  Topping up with a 3rd party credit card is fine in real-life use as of now, but that may also be skewed in that around me it's primarily 7-11 and McDonalds that accept NFC payments - neither of which are large purchases nor frequent visits.

Luckily a lot of the new announcements for phones show NFC in the spec list so hopefully NFC-enabled phone penetration will rise, perhaps providing the egg to the merchants' chicken and answering an age-old question...  Of course, the real question will be whether these devices will be running Google Wallet, Iris, PayPal, some other system, or not be used for mobile payments at all.

BTW, while VZW doesn't officially support Google Wallet on the Galaxy Nexus it is easy enough for even a non-power-user to install it.  I believe it may even show up in the Android Market Google Play these days.  

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