Observers have speculated that now that ISIS has signed on card networks Visa, MasterCard, Discover and American Express to work with its telecom members AT&T, T-Mobile USA and Verizon on mobile payments, it will muscle out competing scheme Google Wallet. To date, Google has signed on one card network, MasterCard, and one telecom operator, Sprint, as well as Citi, First Data and sixteen merchants as tenant partners.
But Google representatives scoff at this notion, pointing out that the Google Wallet is being used in field trials by more than 1,000 employees of Google and its partners. Google will launch its app in a few weeks (the company would not give a specific date) and is talking to other potential partners. Google says its open commerce ecosystem is available to all credit card networks, mobile phone providers, handset manufacturers, merchants and banks.
"Google is deeply engaged with many banks both here in the U.S. and abroad," says Marc Freed-Finnigan, senior business product manager for Google Wallet. "We're working together to create open standards for how accounts are provisioned over the air and how the industry can transition to mobile devices. Today we've announced formal relationships with Citi and MasterCard and have no new partnerships to announce today. But we encourage you to stay tuned."
A Google employee who spoke off the record hinted ISIS' card network relationships may be shallow and far from execution, whereas Google's partner relationships reflect deep commitments in which, for example, Google has already built MasterCard PayPass compatibility into its app.
The Google Wallet app works with a Nexus S near-field-communication-enabled phone (meaning a phone equipped with technology that can send and receive data wirelessly within a range of a few centimeters) and MasterCard PayPass terminals, which are used by 140,000 merchants. When the Google Wallet publicly launches on the Sprint network later this summer, customers who have a Citi-issued MasterCard or a Google prepaid card that they link to the downloaded Google Wallet app will be able to tap their mobile phone to pay for something at a participating merchant's terminal.
Although Google, because of its strong brand and merchant relationships, is a formidable player in the emerging mobile payment business, the company says its business model is based not on payments or financial services, but on advertising and coupons it sells to merchants.
Some banks are wary of working with a company like Google for fear that it will take their customer lists and run with them. But to many observers, this is a mistaken idea. "The idea that you can own the customer is a fantasy," says Aaron McPherson, practice director, financial services at Financial Insights. "It seems outdated in internet age. Customers don't want to be owned, they'll actively work against you if you try to control them. Far too much time is spent thinking about who's controlling the customer, and not enough about how to broaden the overall pie."
