Several months after Apple jumpstarted the market for mobile payments, Google has finally responded. The Android maker has established partnerships with the three biggest wireless carriers in the United States that will see its Google Wallet technology enhanced and bundled with all Android devices they sell.
Google actually launched Wallet and mobile “tap and pay” capabilities in the United States back in 2011, but it lacked support from wireless carriers and is only preinstalled on a small number of devices. But with Apple entering the market in late 2014 with its popular Apple Pay service on new iPhones, mobile payments have exploded. So it makes sense that the world’s biggest smart phone platform—Android—would soon become a bigger player.
Tap and pay requires very specific technology—NFC, or Near Field Communications, which is the wireless bit, plus a Secure Element in the phone’s firmware or SIM card—but the big stumbling block for Google had been the wireless carriers, which mostly refused to sell phones with tap and pay functionality or simply disabled the technology so it wouldn’t work. Why? They were pushing their own mobile payments technologies and didn’t want Google to push it aside from business conducted on their networks and phones.
But thanks in part to the success of Apple Pay and wireless carrier fears of a monoculture, that standoff is ending. Under the terms of the deal, Google’s Wallet app, including the tap and pay functionality, will be pre-installed on all Android phones sold by AT&T Mobility, T-Mobile and Verizon Wireless in the US starting later this year. Google also announced that it was “acquiring some technology and intellectual property” from Softcard, a mobile payments system that is co-owned by those same three carriers. This technology will be used to improve Google Wallet, Google says.
The future of Softcard is unclear given the vague nature of this week’s announcements. Softcard says that “for now, Softcard customers can continue to tap and pay with the app,” which suggest that things could change in the future. Here, “the app” refers to the current Softcard app, available for Android and Windows Phone, which enables secure mobile payments on those platforms. It’s not currently clear if Google’s acquisition of Softcard technology and intellectual property will negatively impact the availability of the Softcard app, which is currently the only way Windows Phone users in the US can make secure mobile payments as with Apple Pay. Given the hostility between Google and Microsoft, that fear is reasonable.
Microsoft launched its own Wallet functionality in Windows Phone back in 2012, but the technology was never broadly adopted by wireless carriers, and not at all in the United States. Today, the Windows Phone Wallet app can be used to store boarding passes, tickets, and deals—a bit like the Passport app in iOS—and can be used to access the payment methods available to your Microsoft account. But you can’t use it, in the United States and most other places in the world, to make Apple Pay-like mobile payments in retail locations.
Hopefully Microsoft will address mobile payments at the Mobile World Congress trade show that starts next week in Barcelona. Samsung, the world’s biggest maker of smart phones, recently acquired Loop Pay, another mobile payments service, and with Microsoft increasingly shut out of the most lucrative mobile markets, this would be a bad time to roll over and play dead.