The news that Google may be considering its own mobile payments service shouldn't actually be news to anyone who's been following the Internet search giant's latest moves - it's just a matter of connecting the dots. But the insider reports over on Bloomberg Businessweek today confirm that the thought has at least crossed Google's mind.
According to "two people familiar with the plans," Google may launch the new mobile payments service, which allows consumers to tap or wave their mobile phones at a cash register to pay for their purchases, sometime this year.
Well, surprise, surprise.
Connecting the Dots: Android Has NFC
Google getting into payments? This isn't as crazy an idea as it sounds. The company's newest version of its Android mobile operating system, the revision code-named Gingerbread, has added support for Near Field Communication (NFC) technology. Although new to the U.S., many parts of Asia and Europe have long since been using NFC to enable transactions, including everything from paying for subway tickets to purchasing Cokes from vending machines.
NFC works by way of a small chip embedded into mobile phones or other devices (or even stickers!) that allows the device to send transmit data over short distances.
At the moment, the NFC support in Google's Android software allows for one-way, read-only transmissions, but that limitation is only temporary. Google's Jeff Miles, the company's director of mobile transactions, recently confirmed that Android would be updated to include both read/write support in a future version of the mobile software. The update is expected to show up in Gingerbread itself, instead of in an entirely new software version, like the forthcoming Honeycomb version, due out later this year.
With read/write support in place, phones running the Android software and that include the necessary hardware would be NFC-, and therefore, mobile payments-enabled.
Google Goes Local with NFC Stickers, Hotpot Program
In addition to the technological support for NFC transactions in Android phones, Google has also launched a local advertising program called Hotpot. The program is focused on allowing businesses - primarily restaurants, bars and cafes it appears - to advertise themselves to customers by way of NFC-enabled window decals. Hotpot, still in its pilot phase in Portland, Oregon, lets a passerby wave an NFC phone at the sticker, which in turn takes them to a mobile Google Places Page for that business via their device's Web browser.
These Places Pages serve much of the same function as services like Yelp do - they provide a location's name, address, phone number and other details alongside user-generated ratings and reviews. And you can see which establishments your friends liked, too.
Google Acquires Mobile Payment Company, Tried to Get Groupon
Another recent Google acquisition, which flew under the radar until some eagle-eyed analysts at the 451 Group spotted it, was of mobile payments firm Zetawire. The small Canadian company had one thing going for it: a patent app for mobile banking, advertising, identity management, credit card and mobile coupon transaction processing. In other words, a complete mobile wallet solution.
Google's other recent, but failed, acquisition attempt - that of local couponing service Groupon - could have also tied into this mobile wallet initiative the company reportedly has in the works.
Bloomberg's article didn't deliver much new information about any of these services, only confirming that indeed, the dots are being connected and something big from Google is well on its way.
It also noted that NFC phone shipments are expected to rise to 220.1 million units by 2014, a figure that indicates that the mobile phone-toting world is ready for such a service to exist.
Challenges to Google's Mobile Payments: Carriers, Other Manufacturers, Credit Card Companies, More
But Google won't be without its challengers. PayPal is expected to dabble in NFC payments, too, this year. Apple hired an NFC expert and both Apple and RIM have filed NFC-related patents. Complete services from the likes of Visa and the mobile phone carriers themsevles have also either launched or will be launching this year. Even startups like Bling Nation are getting in on the action, NFC-enabling old phones by way of stickers.
Plus, Google will have to walk a fine line if it wants to avoid the "creep" factor. People are already sensitive about the amount of data the Internet search company has on file. In fact, that issue is now being used as a marketing technique for the upstart search engine DuckDuckGo, who touts its privacy features by way of a website at donttrack.us ("When you search Google...your search term is sent to that site, along with your browser and computer info, which can identify you.")
How will people feel about a Google service that tracks their jaunts about town, their favorite local businesses, their couponing habits, their financial information, their bank accounts, their spending habits and their purchase history? Technology aside, that could be the biggest hurdle Google has to overcome to make their mobile payments business a successful one.
