Last week, I wrote an article bringing attention to the Google Wallet Card. This decision to print and give away a free debit card will usher in a new epoch of payments, banking, and budgeting. But when I finished writing the story, I realized there was a missing piece to all of the current press: Why did Google release an offline debit card in the first place?
Google Wallet was announced in 2011, and released as a smartphone app in September of that year. After over two years of development and company expenditures, critics suggest the experiment has failed:
…Google Wallet is a dud, at least to date, despite the company’s expenditure of an estimated $300 million in real money on its development… (USAToday)
Earlier this year, rumors began swirling that Google would be releasing a physical debit card to be paired with its Wallet service. Unfortunately, ahead of the company’s major press event, Google I/O, they scrapped the release and went back to the drawing board. Despite being considered a “dud” by some analysts, Google Wallet was already beginning to catch on – largely credited to the payment processing of Android apps and Google Play purchases.
Google is already sucking in that purchase data on many fronts — between Google Play payments, Google Checkout on the Web and also advertiser payments — in addition to the dedicated Google Wallet project. (AllThingsD)
On November 20, 2013, Google decided to follow through with the release of a physical debit card (issued with a Mastercard logo). Commentators and speculators suggest that the Google Wallet platform needed to increase users’ payment options. As much of what we buy in stores takes a physical swipe of a card, these stories suggest that the debit card would help pay for physical goods. But tech writers have questioned Google’s decision to enter the physical world:
It’s surprising because Google exists to get people off physical media and into virtual digital everything. They’ve also been a leading force in mobile payments with both Android and Google Wallet. (ComputerWorld)
The persistence of plastic suggests we’re a lot farther than we think from a world where true mobile payments are the norm. (Washington Post)
Thus far, the primary hypothesis seems to center on the idea that Google has admitted to the failure of its online-only payment platform – it’s kowtowing to the payment processing gods and issuing a physical card. These articles and writers don’t give enough credit to this decision or Google’s business acumen. The company is in the payment processing business for the long haul. Much like their advertising platform, which is considered to be the best ad system in the world, payments give vital details about user habits, transactions, and life outside Google. There’s money in that big data and Google is about to start drilling.
With the release of a debit card, Google Wallet is not admitting defeat nor is it suggesting we have a “lot” further to go before mobile payments become the norm. Rather, the Wallet platform is injecting itself into the current psychological modality for purchasing goods for evolution down the road. Users of the product will begin to natively track and spend via the online platform. This will likely cause people to start defaulting to this payment system.
Meanwhile, Google has laid a diverse framework and future for the payment system by interlinking it with Gmail, Google+, and a growing number of online services. Now, you can send money via Gmail, swipe for gas, and receive a payment – instantly and securely. But Google needed a card to segue purchasers to this mobile platform. Eventually, when people are convinced that the online, digital model works better than physical, debit card swipes, Google will win.
Every recent service Google has announced has required a segue from the search model. From Drive to Plus to Wallet, these services have been built-in to a diverse set of products. Drive is now caked into Gmail attachments. Plus is a necessity for YouTube comments. And now, Wallet… Necessary for Google Play purchases and about to grow into another multi-billion dollar industry for Google. Making a physical card was just another segue for Google to make users’ switch to a mobile payment model more seamless.
An era of mobile payments is nearly here. In the next 4 to 5 years, we’ll likely see a massive switch to digital payments. Just like the banking industry today, there will be multiple players and competition. The major difference will be that tech behemoths will compete directly with big banks. What’s clear is that the players that can create a natural blend of on and offline payments now will win later.