PayPal and now Google – Is big business always best?
If you had a sense of déjà vu when watching the much-anticipated launch of the Google Wallet this week, you wouldn’t be the only one. It was only last October that the then VP of Platform, Mobile and New Ventures at Paypal Osama Bedier hosted the PayPal Mobile X conference and touted the “ground-breaking” relationship between Bling Nation and PayPal. This relationship was, according to PayPal at the time, going to see mobile wallets and contactless payments become mainstream.
In fact Eric Duprat, previous General Manager of Mobile at PayPal, made a comment at the Alternative Payments Solutions Innovation conference only a week earlier that “PayPal is going to own the mobile space”. He was referring to the emerging mobile wallet applications being discussed.
As I have often said, developing the right business model for any mobile wallet is essential, even for big business. The consumer and the merchant must find value in it. It would seem from the collapse of the PayPal Bling Nation relationship that PayPal didn’t succeed with their chosen model. Perhaps that was one of the contributing factors behind Bedier’s decision to jump ship and join Google as its VP of Payments, or perhaps Bedier just thought Google had got it right.
According to Google’s VP of Commerce Stephanie Tilenius, the Google Wallet is centred on an Android app which will enable you to use your phone to “tap, pay and save”. We’re told it will use the MasterCard PayPass rails to access over 120,000 merchants in the US who are ‘contactless ready’.
In a recent blog post, Google said “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 a mobile wallet.
If they deliver on this promise, mobile users around the world could be breathing a collective sigh of relief – this may be one of the few payment methods that help save both time and money, with no obvious strings attached. Hallelujah! Is this finally a big company singing from the same hymn sheet?
Well, in theory, yes. But in reality, Google’s promise may not deliver all it should. I can’t speak for other companies, but we need to recognise that the Google Wallet is currently only available on the Nexus S mobile, which is sold through Sprint Mobile. You will need to have a CityBank credit card or the Google GCard to use the Google Wallet as no other payment sources at this stage are accepted. Even though Google plan to slowly introduce other NFC enabled phones on which their Wallet will work, those phones will need to be Android based. Even by their own admission, NFC enabled phones are only expected to reach 50% of all smartphones by 2014, and it’s anyone’s guess how many of those will be Android based. This leaves a massive space for companies like Waspit, which provides an all-round mobile wallet, regardless of the technology you’re using.
This is why I remain sceptical with the outdated theory that the biggest is always the best. If the largest and most recognised brand in the digital environment today can’t or don’t provide the network, phone and bank agnostic solutions the consumers and merchants want, then why not turn our energy towards smaller vehicles who can provide you with all of your requirements? Interestingly, Tilenius referred to some statistics about the growth of ecommerce:
“In 1998, 70 percent of consumers said they wouldn’t use the internet for financial transactions. By 2009, consumer opinion had flipped and 70 percent were using their credit cards online”.
I can see how this demonstrates that consumer patterns will change with the introduction of new technology, but wasn’t it PayPal who started providing a much needed bank agnostic payment solution which made purchasing goods on the internet easy and secure for everyone? And wasn’t it this same approach that made PayPal the success it is today? For some reason, it seems neither PayPal nor Google can see this.
Fortunately for us at Waspit, our clear point of difference therefore remains unchallenged – our mobile wallet is completely agnostic and available to all users, regardless of your technologies.
In saying this, Google will be a welcomed player in this sector irrespective of their precise commercial model. They will do a great job of educating the consumer and pave the way for some interesting competition. Their rollout of a more user friendly and digital capable discount business will provide real value to consumers, and will likely cause concern over at Groupon. Moreover, they claim that their program will be open to their partners to leverage. I recently read a comment that Groupon was like the Sarah Palin of the discounting world, a comparison Groupon investors may have been lamenting on while Google made this week’s announcement.
I’ve said it before, and I’ll say it again: consumers and merchants want value, freedom, security and agility – not just a big brand. As the saying goes, good things come in small packages.