Google in deal to boost mobile payments

24th of February 2015

Google on Monday struck a deal with struggling start-up Softcard and several US telecoms companies to beef up its Google Wallet app as it tries to tackle Apple in the fast-growing area of mobile payments.Under the deal Google will buy mobile wallet technologies and patents from Softcard, and its wallet will be pre-installed later this year in the US on Android phones sold by AT&TT-Mobile USA and Verizon Wireless which backed Softcard. A price for the deal was not announced.FirstFT is our new essential daily email briefing of the best stories from across the webThe fight is intensifying for market share in mobile payments, which allow consumers to store credit and debit cards on their smartphones and tap their phones to pay for goods in stores.So far consumers and retailers have shown more interest in using Apple Pay over Google’s Wallet. Meanwhile, Samsung has also signalled it intends to take on Apple. Last week it bought LoopPay, a mobile payments technology company, for an undisclosed sum, and analysts expect it to try to launch a wallet of its own.Bankers expect more deals this year, particularly as PayPal, which is being spun off from parent eBay, tries to strengthen its presence on mobile.The tie-up of Google and Softcard comes after both apps, which were launched in 2011 and 2010 respectively, struggled to win over consumers. At that time the idea of tapping a phone to pay in-store was new, and with few retailers then equipped with the technology to accept the payment method, few consumers saw a need to use the apps.Apple pulled ahead last October with the launch of Apple Pay, which was installed on all its latest generation smartphones. As part of the launch, Apple partnered with major retailers and app-makers, from fast-food chain McDonald’s to upscale supermarket Whole Foods, to ensure nearly all consumers would shop frequently at a store that accepted it.While Apple has said it will not collect data on consumers — it profits from taking a small slice from the fee merchants pay to process card transactions — Google, whose app will be free for consumers to use, stands to benefit from becoming a party to its users’ offline purchases, said Bryan Yeager, a payments analyst at eMarketer.eMarketer estimates that $3.5bn in tap-to-pay transactions were made in 2014, and this could grow to more than $25bn by 2016, it estimates.“Google had a lot of data from its searches, from its ads, but that stuff’s all digital. Ecommerce is big but it still has single digits of market share compared to offline commerce,” said Mr Yeager.“They want to be in this space and be privy to those types of transactions that are happening in the physical world.”

Financial Times