Couldn’t resist the opportunity to weigh in, briefly, on the story that had the Web in an uproar yesterday. Seems as though Verizon may be giving Google the proverbial lump of coal a little early this year by saying ixnay to its Wallet. (Read Verizon’s latest statement.) Now, having the largest mobile operator in the US make that call is pretty big. It would certainly limit Google Wallet’s distribution possibilities a whole lot in the US.
The “talking points” are all about security, but my take is that it isn’t really about that at all. It’s a battle over the Secure Element. It is about security, certainly, but is also about control – control over who has access to their customers and the services they are provided. Google has its Secure Element, in fact, and wants it to become the standard for NFC (which is lacking today) That, naturally, means it won’t use Verizon’s. That also means that Verizon isn’t able to lock in Google Wallet customers in any way, including through any sort of financial arrangement/rev share. (Related: Handicapping PayPal in its Mobile Race with Google and Others)
So, where would that leave Google? Well, as the saying goes, there are other fish in the sea, and they’ll sure need them. Sprint was fine for a test, but isn’t enough for Google to scale. Google’s mobile payments strategy, a wallet on a chip in a phone, by design unfortunately for them, also means that an operator is very much in the mix. It’s a fatal flaw in the whole NFC mobile payments scheme and is why my view of success with mobile payments, consistently, has been about mobile wallets that live in the cloud, far, far away and completely disassociated from mobile operators. That approach means that wallets can follow consumers regardless of which handset or operator a consumer decides they want to use and a service provider wants to enable. The gating factor in this scenario is getting the consumer to say yes, which is still hard. If anyone needed any more evidence as to the merits of such a mobile payments/wallet strategy, then look no further than this news story. It will surely be interesting to see how this all ends up.
Karen Webster is the CEO of Market Platform Dynamics (MPD), a consulting firm that helps companies find, implement and monetize innovation. She serves as an advisor and member of the board for a number of companies operating in the payment, technology and digital media industries. More info here.