Google Wallet to Shed More Features in Redesign: Report

Google reportedly plans to discontinue allowing consumers to use its mobile wallet for contactless loyalty and gift card redemption, the latest in a series of changes since Google Wallet's launch.

Google outlined its latest step in an email to Google Wallet users, according to the tech news site Androidspin. Contactless redemption will end on Aug. 21, and consumers must use any outstanding balance by that date, the article says.

"It looks like Google Wallet is dropping one of its key original ideas, that consumers would be able to pay and redeem points in a single tap of their phone," says Zil Bareisis, a senior analyst at Celent, in an interview with PaymentsSource.

The move does not affect the wallet's ability to make payments from a credit or debit card, Androidspin reports. Google says it is working with retailers on other options for gift card redemption, the article says.

The discontinuation of loyalty and gift card redemption is the latest in a growing number of changes to Google Wallet since its launch. From the start Google had to address security concerns tied to a virtual prepaid card account that it eventually discontinued.

Google also dramatically changed its approach to working with banks a year ago, a move that finally won it more issuing partners besides Citigroup, which worked with Google Wallet from its launch.

Google at some point planned a physical payment card that would work with its mobile wallet, but it halted that plan months later. Google Wallet exec Osama Bedier, who unveiled the mobile wallet at its launch, left the company this year.

Though Google worked with Sprint from the start, it has long faced opposition from the other major carriers. Even the phones Google builds through its Motorola Mobility unit do not support Google Wallet on many networks.

In another move to recast its payments strategy, Google began integrating Google Wallet payments with Gmail, added a Chrome Wallet App to allow payments in Google's Chrome browser, and introduced one-click checkout for Android devices. Google Wallet has also made inroads as a way to hail cabs or order car service pickups.

The latest move in ending contactless loyalty redemption allows Google to step away from its reliance on Near Field Communication technology, Bareisis says.

"Having said that, I still believe that loyalty cards and merchant offers will continue to be central to Google Wallet's strategy and the company hinted it was working on alternative solutions," he says.

Google did not return a request for comment by deadline.