Google charges ahead in the 'device race'

Google charges ahead in the 'device race'
Tags: Mobile Payments, Online Retailing, Payments, Retail - Electronics, Technology
June 5, 2011

It was extremely timely that Google announced the debut of its Google Wallet mobile application last week, just as we were about to publish the latest issue of COLLOQUY on our website, with an in-depth cover story on what we call “The Device Race” — that is, how loyalty practitioners are placing bets on what will become the loyalty device of choice.

Will tried-and-true plastic cards or keyfobs remain king? Or will swiping smartphones become the new trend? How about emerging technologies such as fingerprint scans? And what’s the latest on the EMV chip technology that was all the talk at loyalty conferences a while back?

At the moment, many technology and financial services companies are placing all their chips — literally — in the near-field communications arena (a chip-based technology that enables contactless payments), which is where Google Wallet is currently standing center-stage. It’s new app, to be available on its Android operating system this summer, will allow consumers to wave their smartphones at designated retail terminals instead of swiping a credit card — which can also be enabled to offer special promotions, coupons or loyalty points.

According to a New York Times article on Google’s announcement, the search engine giant says the mobile wallet will work at 124,000 merchants that accept MasterCard’s Pay Pass terminals and more than 300,000 non-U.S. merchants.

Yet, as we reported in “The Device Race,” the good old plastic card will still be around for a while: For example, the Los Angeles Times points out that Google Wallet will only work in 1 out of 100 MasterCard locations…meaning that most people won’t be able to use it on a regular basis even if they want to, and those who want to will mostly be early technology adopters.

That said, it’s clear the race is on to figure out what will be the loyalty device down the line — and when we talk about loyalty “devices,” we mean the unique identifier that is used to identify customers and track their behavior. The companies that are getting in now, including financial services, technology and retail companies who have the most to gain from the adoption of mobile payments and mobile loyalty programs, want to make sure they get a first-mover advantage to stay ahead of their competitors in a fast-changing environment.

Google Wallet, though, is just the beginning of a long stream of near-field communications mobile payments/loyalty roll-outs: As we reported, Verizon, AT&T and T-Mobile joined forces last fall as ISIS, while Amazon is rumored to be coming out with their own option in a few months.

Meanwhile, the lawsuits are flying fast and furiously too: The same day that Google Wallet was announced, EBay and its PayPal subsidiary filed suit against Google and two former PayPal employees, claiming they had stolen trade secrets in developing Google Wallet.

We here at COLLOQUY are watching the “device race” play out with interest — with a smartphone in one hand and a leather wallet in the other. We shall see!