Driver's licenses typically have little to do with payments. But the DMV-issued credential is a major part of Google Wallet's strategy, acting as an onramp to dozens of financial and non-financial services.
"Digital ID will be a cornerstone for us in the next year," said Dong Min Kim, director of product management for Google Wallet. The technology company hopes to expand the number of jurisdictions that embed driver's licenses into Google Wallet as a form of authentication. That could make it easier for users to access a growing menu of other products via Google, including those using the technology giant's generative artificial intelligence.
The stakes are high for Google Wallet, which
"We want to create a wallet that will make people feel comfortable leaving their physical wallet at home," Kim said.
License to pay
Colorado, Arizona, Maryland and Georgia are the first states to enable driver's licenses to be accessed through Google Wallet. There's a pipeline of additional states that will come online in the next few months, according to Kim.
The challenge that has kept this method from fully catching on is the differences between states and other jurisdictions regarding driver's licenses and identity, according to Kim. Google is working with states and regulators outside the U.S. to bring more jurisdictions on board, he said.
"ID is a tough problem to solve.The governments themselves aren't aligned," Kim said, adding that federated identity is more challenging to achieve than standardizing payment acceptance.
There has been progress in standardization given the expansion of EMV chips; more than 84% of card-present payments in the U.S. and 91% of all global payments involve EMV cards, according to
ID is an important piece of Google Wallet, given how Google divides its digital payments.
Google Wallet is accumulating dozens of other digitized versions of things that people have traditionally stored in plastic form in their old physical wallets, such as transit passes, company IDs, health insurance cards, AAA memberships, gym access, boarding passes and more.
The strategy is to use the habits that come from payments to keep people inside Google's ecosystem to access other services from Google and its partners. Consumers chose to save digital ID and other passes in the Google Wallet. Its rival, Apple, uses
"There's a lot of non-payment features and functions that people are now using Google to perform," Kim said. "We've noticed people are storing content and all kinds of documents in Gmail and Google Drive. That's a personal hack that people are using, but we think there can be a better way to do that with Google Wallet."
Google's recent financial services additions include
"Building all of these services is a multi-year journey. It's not something that can and will be set up right away," Kim said.
Google is also developing payment-related uses for
Most of the uses for payments and consumer financial services are still to come, said Kim, who did not discuss specific forward-looking gen AI products designed for Google Wallet or Google Pay. Early gen AI adopters in the payments industry include
"You can imagine how we can make the stuff in the wallet more helpful, to make the right recommendations or to better guide how you use the wallet," Kim said. "Stay tuned."
Where there's demand
Research suggests consumers' mobile usage is creating demand to attach mobile wallets to other activities.
In 2019, American adults spent an average of 228 minutes per day on mobile phones performing "non vocal" activities, or not speaking or sending texts or emails, according to
Globally, the number of unique mobile subscribers will grow from 5.4 billion to 6.3 billion in 2030, according to global mobile commerce researcher
GSMA also projects that there will be growth in non-payment fintech products such as lending, investment and personal finance, noting that payment credentials can be used to access these other services.
Mobile commerce accounts for 65% of all e-commerce traffic, according to research firm
Managing ID is essential to meeting that demand. The essence of any digital wallet is to positively identify and authenticate the user authorizing payment, said Richard Crone, a payments consultant.
"The foundation of Google's business is identity, both outright and anonymously, through cookies and groupings or advertising cohorts," Crone said.
Crone's consulting and research firm estimates that Google Wallet has as many as 350 million active users globally (Google does not release this information). Positive identity is worth up to $736 in annual revenue per digital wallet user, since Google would be serving as the system of record, controlling access to credentials, according to Crone's research.
Google has deployed several strategies to enroll users for bank accounts and other financial services over the years, including a system for checking accounts called
Among other firms, payment fintech and buy now/pay later lending
The pending Paze wallet from Early Warning, the firm that operates the bank-led Zelle P2P network, is another effort to use payment credentials to build a base of users for a broader set of financial services available via banks.
"It's not just about payment; it's about new account acquisition," Crone said, adding that if Google facilitates the opening of a new credit card account on a browser today, it will gain revenue from issuers for that card opening. "The positive identification of a user is the foundation for additional new account openings."
