Google pushes m-commerce

30 May 2011

MOUNTAIN VIEW: Google, the online search giant, is rolling out new mobile payment and promotions services, anticipating rapid growth in both of these sectors.

The company's Google Wallet platform will use Near Field Communications (NFC) technology, enabling customers to pay for items by touching their phone against special in-store readers.

Additionally, Google Offers is premised upon delivering special deals to consumers, a category already featuring operators such as Facebook, Foursquare and LivingSocial.

"We've joined with leaders in the industry to build the next generation of mobile commerce," Stephanie Tilenius, Google's vp, commerce and payments, said, according to the Financial Times.

"With Citi, MasterCard, First Data and Sprint we're building an open commerce ecosystem that for the first time will make it possible for you to pay with an NFC wallet and redeem consumer promotions all in one tap, while shopping offline.

"We are looking at expanding internationally, Europe first and then Asia."

Google revealed that the Wallet programme is open to further potential partners, and it will not take a share of any transactions.

Although it is to claim a proportion of "costs per action" on promotions, the overarching goal covers enhancing the firm's central area of activity.

"We're not making money in commerce, we're making money from our core business, which is advertising," Tilenius said.

The Mobile Wallet's initial test phase, using MasterCard's PayPass system, should run in New York and San Francisco later this year.

"This is part of a broader strategy that Mastercard has been working on to use mobile phones as a platform to displace cash and cheques around the world," said Chris McWilton, Mastercard's president, US markets.

Google predicted half of wireless handsets sold across the US will boast NFC functionality by 2014, and the objective is to ensure the Wallet service is gaining traction considerably before this date.

"It won't be a long trial," said Fared Adib, svp for new product development at Sprint, said. "You trial things when they are nearly done and ready to go out."

The retailers signed up thus far include American Eagle Outfitters, Macy's, Subway, The Container Store and Walgreens.

"Google Wallet will improve the shopping experience," said Martine Reardon, Macy's evp, marketing and advertising. "It will make the transaction faster and easier."

Fred Grover, American Eagle's evp, marketing and direct, was similarly enthusiastic regarding the advantages promised for consumers.

"It's amazing for the customer. It's going to change how people shop. How they want to pay. How they think about going to the stores. And it's going to happen fast," he said.

Restaurant chain Subway equally asserted the combination of targeted deals and easy payment is likely to prove desirable.

"They could be walking about the street, thinking about lunch, type 'lunch' into their smartphone, and instantly receive an offer from Subway," said Jeff Larson, Subway's vp for global marketing.

"Once they're in the restaurant, they go through the ordering process as they typically would, but at checkout they are basically able to tap to pay."

"It moves them through more quickly and gives them a more enjoyable experience overall."

Google's latest scheme places it in competition with an alternative venture, Isis, being developed by Verizon Wireless, AT&T and T-Mobile, and aiming to launch next year.

Charles Golvin, an analyst at insights provider Forrester, suggested that other organisations may utilise Google Wallet, but as the sector is at a nascent stage, further evolution is inevitable.

"I expect that other payment networks and other banks will join this effort, though in some cases it will be a hedge strategy they employ along with their own mobile payment initiatives," he said.

Data sourced from Financial Times, Google, AFP, New York Times; additional content by Warc staff