3 April 2012
Congrats to Google and the TXVIA team. Given that Google is a client of mine I’m not going to comment on anything specific here.. but clearly this deal significantly expands the reach of Google at the POS. No longer will Google Wallet be dependent on a few thousand NFC phones in market.
The primary reason for my post is that a senior retail executive just rang me to tell me they are concerned about Google’s wallet and card strategy. It seems I was incorrect in dismissing the WSJ article on a Retailer Wallet. There is MUCH more structure here than I realized, and it is not just wallet that the retailers are contemplating.. but ownership of a new payment/incentive network. I would laugh if I didn’t want to cry..
- Banks are working to form “the next Visa” because they don’t trust the one in market today
- Retailers are forming their own payment network
- Banks are worried that Google will be the next PayPal, or Visa
- Retailers are concerned about Google killing their customer relationship
- Mobile operators what to own payments.. err… that was last week sorry… now they want to own marketing
- Retailers are refusing to adopt NFC because everything is a card transaction…
- …etc. I could go on.. but the chaos just continues
Retailers, I admit I am VERY biased toward Google. The issue in market perception is: through Google’s effort to be a neutral platform for consumers, banks, operators, retailers, … they appear friendly to the competition. For example, they have no desire to be a Bank.. or to be a Paypal.. but if Banks don’t allow for efficient payments (consumers and retailers) they must deliver an alternative. Google wants to “enable” .. which can mean not picking winners.. but letting the marketplace select them (principle example is Card Linked Offers). This approach is embedded in to Google’s culture of billiant engineers running with a great idea, and letting the market determine if it will work. Apple on the other hand engineers great customer experiences.. In a very, very controlled fashion. How many “partners” has Apple enabled? How many non-Apple businesses benefit from Apple’s platform? How many other brands does Apple support?
Google has no desire to take over retail.. they want to create fantastic consumer shopping experiences. Yes that means Google’s customers are the same as a Retailer’s customers.. and consumers will use a generic andriod shopping app vs. one your IT team built..
The paranoia is just contagious.. billions of dollars are being wasted because few know how to partner… In Google’s efforts to be “neutral” they appear to be friendly to all. To retailers they are “too bank friendly”, to banks they are “trying to be a payment network”, to consumers “they are tracking everything I do”..
TXVIA will be a major turning point for Google in payments. This new platform will enable them to support their internal marketplaces in new ways, and give retailers new tools to deliver incentives on their brand. In the Google Press Release, they mentioned TXVIA support for 100M cards. Take a guess how many of these cards have a TXVIA brand on them? NONE.. It is a company that provides a platform to support many business models (like Blackhawk). If Google continues this approach they will win big. Note, if they do develop a “Google Card”.. it may just be a pilot.. they are not taking over the world with their own plastic.
My top market question is: “what will Blackhawk do now that Google owns your card platform”? TXVIA is the best pre-paid software platform in the market.. hands down.
Tom, great post, you raised so many interesting questions there, including the ones “between the lines”.
Retailers’ own payment network: do consumers really need it? You said (correctly) many times that there is nothing wrong, as far as consumers are concerned, with the current (non-mobile) forms of payment. What makes the retailers believe that can do a better job than the likes of Apple – successful payment solution (from the consumers’ perspective) is not about technology, it’s about UX. Besides, when I pay with Amex, I get my points. If retailers start dishing out rewards similar to the ones offered by the card issuers, that could cost retailers not much less, if not more, than the interchange fee… As for the business side of it, if we bring risk/fraud into the equation, I don’t think retailers appreciate what they are getting themselves into.
Google does not want to be a bank: how do funds deposited with GWallet differ from funds deposited with a bank?.. On a separate note, if Google’s neutral platform is a not a “Blue Ocean” one, someone will find less money in his pocket. Who is that sucker?..
Consumer shopping experience: does that depend (much) on the form of payment?.. One of the consumers’ main concerns, when it comes to e-payments, is security. I doubt it that issue is at the very top of retailers’ agenda – they are primarily after cost cutting.
As for Apple, they are surely nowhere nearly as “friendly” as Google is, but they are not in business of pleasing other companies. Is that a bad business model to follow, if we agree that it will be consumers who will vote with their dollars on who the best experience provider is?
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I guess it is not consumer’s concern, but why the merchants need to spend money to implement PCI-DSS and get punished when something goes wrong because of the inherent security loophole of the credit card? Why the merchants need to pay high transaction fee and use a monopolized credit card system?
I think Google will not pay you any interest if you deposit money in Google Wallet. I think Google will not lend you money. I think Google will not give you checking accounts. Do you think Google is a normal bank?
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An interesting related post (see the full paper, not the slides) and some insightful notes from a recent “payments” conference by Ross Anderson – http://www.lightbluetouchpaper.org/2012/03/29/risk-and-privacy-in-payment-systems/
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A little late here – but here goes…
Re: “How many “partners” has Apple enabled? How many non-Apple businesses benefit from Apple’s platform? How many other brands does Apple support?”
Actually, even when you wrote this, Apple had enabled many – How about Rovio to start with. Each of their app developers is a partner to whom they have returned literally billions of dollars. AS foes, etc that the platform has enabled and supports.
AS for Partnering: how about the music industry? How about all their supply chain? And now IBM (that WAS a surprise). And now V and MA, etc, etc.
The problem with Google – sorry to say – is that everything they do is to get to your shopping habits. If they make no money on their Wallet they get it out of your data. Apple has no interest in this.
Thanks for the article.
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