Google Wallet, Meet me at Camera 3

I really didn’t intend this to be my next post on the DROP Labs blog. I was not planning to write about Google Wallet – again. I have an unhealthy obsession towards it, evidence of which can be found here, here, and here. After the last one, which chronicled my On the road experiences, I pretty much decided not to write about it for a while. There were other things I wanted to write about – Issuer strategy on mobile wallets, Ongoing turf battles between Platform providers/Manufacturers vs Carriers, and then it happened again. Remember Guess, the first fashion retail chain to sign up with Google Wallet back in May 2011? Well, it’s CIO Mike Relish just came and out and said pretty much this – So far about 5 or 6 people combined (I am not making this up!) has used Google Wallet at Guess retail stores to pay for their purchases from then till now. If Guess and Google are unable to marshal their considerable online and retail resources, to provide a value proposition that can appeal beyond just a handful of Guess customers, then Google should reevaluate its relationship with Guess as a Google Wallet Retail pilot partner.

Let’s compare Google Wallet’s success so far with a competing and successful product strategy so far – that of Square. Square, since its launch has been a merchant facing product till it rolled out its loyalty platform – Card Case. Square faced seemingly insurmountable odds when it launched, from being called a cheap plastic card skimmer to everything in between. So far to date, it has signed up (created would have been a better word) over 1 million merchants in U.S. (To put it in perspective, that is 999,999,994 more customers than Google Wallet that Square had been able to influence to shift from cash to plastic!) It did so by offering simplicity, both in form factor, and in its fee structure with the merchants, and more so without a dedicated sales force. No matter how you feel about Square, and differ in opinion about their path to profitability, they are the classic disruptor. As incumbents in the retail POS sector hurried to build incremental features to their products, so as to cater to their most profitable customers, Square went about quietly building a product that appealed to a million small businesses who were stuck at transacting cash and created both a value network and loyalty that was derived from simplicity in its merchant offering. Square did not market itself to you and I, it did not need to – for it to succeed it required no change in customer behavior, no need for customers to shift away from plastic. We were still swiping away, but at a million new merchants who we previously were unable to transact with, using credit. And once it reached half way there, only then did Square set about to build a loyalty platform which held its first customer facing elements – Card case.

Google Wallet, on the other hand, has no real merchant value proposition today. To say that it does, it will need to provide a way for merchants to close the redemption loop utilizing its NFC based wallet and the merchant’s own POS infrastructure. Even at the 300,000 contactless terminals that could support GoogleWallet, redemption of mobile coupons is still a software upgrade away(software or hardware – depends on who you ask!). Either way, Google is hoping to bring about a merchant tipping point by building a customer base through its Android platform. It needs enough customer momentum at the point of sale, to reach a point where additional merchants are amenable to burdening themselves with new costs for contactless POS purchases. It is as if Google felt that its wallet initiative will be immune to the growing pains that afflict every product launch – including being stuck at the trough of disillusionment. Google seemingly forgot that it has to work at it like every other entrepreneur, putting its product front and center, evangelizing it, giving everyone who has opted to install it a reason to use it every day. Google cannot hope that customer adoption will be driven proportionally by the number of retail partnerships it can achieve in a calendar year. It should actually be the reverse, to use an enthusiastic early adopter community to jump start merchant adoption. The days of “Build it and they will come” are long over.

Since my Christmas road trip, Google wallet sits unused on my phone, mostly staring back at me sadly. I still fire it up and use it as an opportunity launch in to animated conversations with anyone I can find, to show them the future of payments. I hope against hope that the retail locations I visit have a PayPass terminal so that I can get my fix. Most of us have preset habitual patterns for shopping that we rarely venture outside of, unless prodded to change. So far there has been no incentives or reasons that Google can lob at me, in order to influence my purchasing patterns, to reverse my affinity to plastic. And there within lies the problem. I did all the work of getting Google Wallet on my Galaxy Nexus phone, against Verizon’s wishes. Does Google expect me to do everything that follows it – such as finding places where it is accepted, incentivizing daily usage or at the very least prod me to use it outside of the act of purchase, away from the point of sale? If Google expects its app to be used just at the point of sale, then its relevance is greatly reduced as plastic works pretty well today. The challenge that it must rise to meet is to make the wallet app relevant even away from the point of sale (and even to people who does not have an NFC equipped phone, but that’s topic for another day). But, an app that just sits there day after day, doing nothing? How absurd!

So allow me to offer a couple of quick thoughts on how it could further augment the wallet experience so that I don’t have to set calendar reminders for me to fish out the Google Wallet app every other day to stare at, wistfully.

Take back what’s yours: You cannot afford to have Google Wallet be just another app that languishes in perpetual app purgatory, a swipe away from uninstall. Regardless of whether there aren’t enough merchants around me who have Paypass terminals, or requisite offer density, you must provide value. If you think it’s hard for a wallet app to contextualize value outside the act of payment, then you have missed my point. The wallet app must make up for a lack of ubiquitous Google Wallet enabled Paypass terminals at the retail establishments I patronize. And it should actively subvert my intent to patronize those establishments and instead lead me to places where I could get in the habit of paying with my phone. This is the era of customer engagement, and your app is not even personalized.

Integrate Google Offers and Wallet: Google’s own deals platform is yet to reach the requisite density on the scale of GroupOn or LivingSocial. Despite of that, Google offers as they exist today must be interwoven with Google wallet whenever and wherever applicable. Ideally, Google Offers team should be signing up merchants who have the required Paypass terminals to accept Google Wallet payments, and should further encourage offer redemption to utilize the new payment form factor. If required, build out a merchant platform that can fill the void of not having one that can enable the merchants to integrate offers and contactless payments at the point of sale (Easy I know!). Moreover, this could stoke the fire under the combined POS/Issuer/Acquirer thrones so as to get them all moving in the same direction.

Breathing new life in to your Google Prepaid Card: Yes we know that Citi has opted not to share merchant or transactional data with you. So much for trust, right? Instead, how about getting the Google Prepaid Card to pull some weight, and continue to work with the merchant to provide incentives so that we both get what we want out of it – merchant discounts for us, a trove of transactional data for you. Even if the customer’s Paypass terminal is not equipped to handle offers, redemption could happen behind the scenes on the Prepaid Account for the customer, and because the customer is using the Prepaid Card, Google now have access to the merchant information. Both customer and the merchant are blissfully oblivious to the magic that made redemption happen.

So why the earlier comparison with Square? Because Square was able to articulate and execute on a strategy which involved creating a new market of square merchants, with very little focus on creating a brand awareness outside of it. They did not have to effect a shift in customer behavior because their product was not about influencing behavior at the POS, but to create and make available a bigger pool of merchants who now had the ability to transact via credit. Google on the other hand requires real customer adoption for it to succeed at the POS. Merchants who are apathetic to new costs at the point of sale, shall not assume new burdens unless they see real customer momentum. For that to happen, Google has to shift its focus to making real and meaningful interactions with its installed customer base through its wallet app from whatever it is today. If Google is waiting for a larger customer/merchant base before deciding what to do with its wallet app, it may already be over. Thoughts?

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Board of Advisors at SimplyTapp - creators of Host Card Emulation driving democratization and open access to NFC in Android. Mobile Commerce & Payments Lead at Experian Global Consulting, serving Experian's clients in Banking, Retail, Consumer Credit & Payments. A strategic adviser w/ over 17 years of international Tech & Business Strategy consulting, advising firms in banking, retail & asset mgmt that seek clarity & insight in to the myriad business models around payments, fraud & commerce. Founded DROP Labs, a mobile payments/commerce strategy & advisory practice. Tweets here. I'm on LinkedIn here.
Cherian Abraham
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