Google Wallet, RIP?

By Robert McGarvey

NEW YORK ( MainStreet)--The drumbeats announcing death are getting louder around Google Wallet, at least as regards its use at point of sale via smartphones. Multiple sources are predicting it will be "quietly" killed off.

The smoking gun that triggered the whispers was the May 8 ouster of Osama Bedier, the chief architect of the Wallet and its public face.

With Bedier out on the street, the word is that Google ( GOOG) is pulling the plug on its point of sale edition of the wallet. Probably, guess several experts, Google will retain Google Wallet as an online buying tool (à la PayPal), and the company also recently announced integration of Google Wallet as a person to person payment tool inside Gmail (where money can be "attached" to an email).

Also see: NFC Is Dead, Long Live NFC

Emailing from the Google I/O conference last week, John Haro, CTO at mobile marketing company Vibes, said that there was important if indirect news about Wallet's future revealed at the conference. He elaborated: "Google's announcement about Wallet Objects APIs for offers and loyalty cards represents the first real expansion for Google into the non-payment areas of the digital wallet. The new technology aims to solve consumer convenience problems of managing paper coupons and loyalty cards in a way similar - at least on the surface - to Apple's Passbook."

That means Wallet is morphing into a kind of Passbook -- which if course lacks point of sale transaction tools -- and this, apparently, has consequences for the experiment at retail, where Google had hoped its Wallet would utilize Near Field Communication (NFC) purchases at merchants. (At filing time, Google had not responded to a request for comment.)

"There's no doubt in my mind they will kill this," said a senior analyst with a highly regarded technology research firm. He requested anonymity, because he was not authorized by his firm to speak on Google Wallet.

Also see: Why The Glacial Adoption of the Mobile Wallet?

"This space is immature," he elaborated. "Google has the resources to step back and sit this out. Three years from now, when mobile wallets at point of sale have matured as a category, they probably will buy their way into a front row seat with an acquisition."

"Mobile wallets will not mature for three to five years," said another expert. He pointed to the lack of urgency as a reason for Google's predicted exit.

Also see: The True Secret to the Digital Wallet May Be In Your Other Pocket

He also said that Google Wallet was burdened by the handicap of being available only on a handful of phones, mainly from Sprint. That lack of an installed user base has no easy fix, because, at least for now, AT&T, Verizon, and T-Mobile are still officially pursuing their Isis point of sale network and have expressed a lack of enthusiasm for supporting Google Wallet, which, in most ways, is built around the same technology as Isis.

Also see: Digital Wallets Suffer Lack of Collective Spirit

The second strike against Google Wallet, said this expert, is that it continues to have anemic pick-up at point of sale. There are few outlets that accept it - they need spiffy point of sale terminals capable of handling NFC, and most retailers are sitting on their hands regarding terminal upgrades as they sort out what they plan to do to accommodate the Visa and MasterCard demand that they be capable of handling EMV (so called chip and PIN) cards by 2015. In the context of that indecision, upgrading to NFC is not on the table for most retailers right now.

Strike three, said yet another expert, is that financial institutions who need to play ball by allowing their credit and debit cards into the Wallet remain leery of exactly what Google planned to do with customer data. Google for its part - via statements made by Bedier at industry conferences - has insisted it did not intend to own the data, that it belonged to the financial institutions.

But at the same time, Google said it wanted no piece of credit or debit card interchange fees at transaction - all that money belongs to financial institutions, said Google. Still Google could do that, because it planned to serve targeted offers and advertisements to Google Wallet users, which - pointed out multiple experts - seemed to suggest Google planned to sort through the transaction data before passing it onto financial institutions. The vagueness of Google's intent around transaction data has loomed as a large obstacle in the eyes of financial institutions, said one expert.

Add that up, and, a couple years into its Google Wallet mobile edition, the company appears to be failing on all three key fronts: there's sparse consumer adoption of Google Wallet ready devices, there's little availability at retail, and there is festering financial institution unease with Google's intentions.

Also see: Fear and Loathing with the Digital Wallet

"I would bet my life Google exits the Wallet at point of sale within 12 months," said an expert who requested anonymity. "It really has no chance to gain share in today's market. No chance."

--Written by Robert McGarvey for MainStreet--