Why Google Wallet Isn’t Ready yet

I want Google Wallet to succeed, I really do.

Wallet is the search engine’s bid to marry a mobile payment application with NFC-enabled Android phones (actually phone, at this point), and partner with financial services firms to let consumers pay for goods by tapping their phone.

When the service goes live in New York and San Francisco this summer, users will download the Google Wallet application from the Android Market and provision either a Citi MasterCard or Google prepaid card to the app and the NFC chip on their phone.

Shoppers may then tap and pay for goods on special, NFC-enabled point-of-sale terminals in more than 124,000 retailer stores that offer MasterCard’s PayPass service (311,000-plus worldwide).

Wallet is being offered in conjunction with Google Offers, a new local deals service the company is using to entice consumers to buy into discounts and use Wallet to pay for goods.

Short of a few pieces

After attending the Wallet and Google Offers introduction last week, I’m fairly certain Google has the correct puzzle pieces in place, but it doesn’t have nearly enough to complete the puzzle.

I use a lot of Google web services, as well as Groupon, so consolidating shopping and deals in a central location on my smartphone is appealing to me, but I personally find the service too limiting at this time.

Here’s what is missing from the nuts and bolts of each of the categories:

• The service is only currently available on the Nexus S 4G, which is a nice device but no Jesus phone. I don’t know how many of these phones have been sold since it launched on 8 May, but I guarantee it’s not enough to stimulate Google Wallet adoption. Wallet needs wider support.
• Launching on one single payment provider in Citi MasterCard won’t cut it either. As with the phone, you need to make sure something as potentially big as Wallet has the support of multiple payment providers before you roll out. Not everyone uses CitiGroup MasterCard or wants to. Where are American Express, Visa and Discover? Wallet’s credit card payment options are too limiting.
• At launch, there are 15 retail partners, so people have to not only have a Nexus S 4G and a Citi MasterCard, but they have to shop at these fine stores. I’m sure there are plenty of people who don’t patronise any of them regularly. I go to Subway 20 times a year, but I can’t recall the last time I went into American Eagle.
• If you’re a Wallet user and your phone is lost or the battery dies, you’re stuck back using plastic or cash again.

Clearly, Google is launching Wallet with its usual, start small and iterate regularly play, but I think this is the wrong move for such a potentially important service.

If you want a lot of people to adopt something, you don’t limit their choice of phones, payment options or retail options. It doesn’t matter that the Wallet app is free; if people can’t use it, it’s useless.

Where’s the demand?

Despite all of that, here is the biggest hole: demand. Omar Bedir, vice president of payments for Google, built Wallet because he is the type who hates carrying a physical wallet. I dislike big bulky wallets, too, but I do OK with a little credit card sleeve and a cash clip.

My wife uses the Starbucks application to pay for coffee and earn loyalty rewards via her iPhone 4. But when I told her about Google Wallet, she wasn’t that interested.

Why? She keeps other stuff in her wallet not covered by Wallet, such as manufacturer coupons Google Offers can’t give her and plenty of other stuff.

People just don’t need services like Google Wallet, no matter how many Offers incentives it throws at them. Jean-Louis Gassée, a general partner for Allegis Capital, summed up the challenge Google faces:

“One reason for the modest success of NFC payment systems is the consumer’s entrenched habits and cognitive obstacles. ‘Plastic’ is well understood, it works, it’s accepted everywhere around the world – and each card is a totem of a distinct account. Well-meaning experts saw that the ‘magstripe’ had more than enough room to store the information for a dozen credit cards and tried to promote multi-account cards. It didn’t work. Merchants and customers found the invisible abstraction of a ‘multi-card’ difficult to manage.

“By the same token, pardon the pun, consumers today see little benefit in making their familiar, physical cards disappear into a contactless device, whether it’s a dongle or a cell phone.”

Google Wallet can work, but it’s going to take more phones, which means more carrier support, more NFC adopters, more banks, more payment processors and more incentives to appeal to a broad range of consumers.