Today Google announced the launch of Google Wallet and Google Offers. Google Wallet is an open source payment solution driven by the early signing up of Citi Bank Master Card. Google Offers is (yet another) offer based website that seeks to leverage the economics of low price high volume time window offerings. Details of these new products can be found via these links:-
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Google Wallet
From my perspective Google Wallet is the first shot in what promises to be an intense electronics payments battle. While the technology has progressed from the days when credit cards were launched many of the economic characteristics are the same. What consumers require from a payment agent is:-
Beyond these factors there aren't really any features that will have significant differentiation on customer's choice of product. On this basis the google strategy seems sound - get in early (first in), try and dominate through ubiquity (quick roll out in two major urban centres), build brand name (already all powerful with Google), minimise cost (through open source and no usage fees), dominate innovation (again through open source).
Existing payment giants Mastercard and Visa must be trembling mightilty at the promise carving up of their 'ecosystem' (when did this bit of business jargon become the flavour of the month?) which has dominated the payments sphere for decades. This perhaps underpins Mastercard's support for Google Wallet, it is surely highly likely that Visa will jump on board too at some point to limit the damage and try to tie up in some sort of propriety format the links between electronic wallets and banking infrastructure.
Visa and Mastercard will always have a strong edge in subject matter expertise in the payments arena, but presumably the arrival of the mobile wallet marks the end of their control of delivery of electronic payment. It will be interesting to see how this pans out - and what other competitors will enter the field to bridge the gap between the mobile wallet and the consumer's bank account.
Google Offers
The business case for this venture seems, to me at least, a lot more shaky. Google are late to the party on this one - VoucherCodes, Time Out, UK Hotdeals, Tip Token have all been in this market for sometime. There is severe contention, and the apparent USP - that Google Offers can be linked electronically to Google Wallet seems a weak (perhaps even undemining?) feature. The point of a discount service is to:-
techcrunch
zdnetasia
Google Wallet
From my perspective Google Wallet is the first shot in what promises to be an intense electronics payments battle. While the technology has progressed from the days when credit cards were launched many of the economic characteristics are the same. What consumers require from a payment agent is:-
- Total security
- Total usage coverage (ie. all places where you purchase anything - from pub to car dealership - to allow payment via your 'wallet').
- Low (or ideally zero) cost
Beyond these factors there aren't really any features that will have significant differentiation on customer's choice of product. On this basis the google strategy seems sound - get in early (first in), try and dominate through ubiquity (quick roll out in two major urban centres), build brand name (already all powerful with Google), minimise cost (through open source and no usage fees), dominate innovation (again through open source).
Existing payment giants Mastercard and Visa must be trembling mightilty at the promise carving up of their 'ecosystem' (when did this bit of business jargon become the flavour of the month?) which has dominated the payments sphere for decades. This perhaps underpins Mastercard's support for Google Wallet, it is surely highly likely that Visa will jump on board too at some point to limit the damage and try to tie up in some sort of propriety format the links between electronic wallets and banking infrastructure.
Visa and Mastercard will always have a strong edge in subject matter expertise in the payments arena, but presumably the arrival of the mobile wallet marks the end of their control of delivery of electronic payment. It will be interesting to see how this pans out - and what other competitors will enter the field to bridge the gap between the mobile wallet and the consumer's bank account.
Google Offers
The business case for this venture seems, to me at least, a lot more shaky. Google are late to the party on this one - VoucherCodes, Time Out, UK Hotdeals, Tip Token have all been in this market for sometime. There is severe contention, and the apparent USP - that Google Offers can be linked electronically to Google Wallet seems a weak (perhaps even undemining?) feature. The point of a discount service is to:-
- Mass advertise discounts to large groups of people
- As a results have a huge impact on volumes of sales
In no way does limiting the outreach - such as having to use an electronic wallet with limited penetration - appear to be particularly promising in attracting retailers to the platform or therefore customers to utilise it. I imagine therefore that GO will use a standard voucher format as all other players in the market do. The result of this will be a standard toe to toe slog between competitors for market share. Google's brand will greatly help, as well as cross pollination from its vast array of services, so perhaps there will be leverage there.
As a side note I am unsure of the long term economics of group offers where short term spikes in demand are cutting long term margins. While a particular supplier may get a vast number of orders the general depression of prices across the market must be severe over time. Indeed such pressure on prices from on line retailers and aggressive deals may be leading to the retailer anxiety we are seeing on the high street today.
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