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Google ups the ante in wallet wars
By Quentin Fottrell
Consumers have been slow to cut up their credit cards and turn on their
mobile wallets. But this week, Google Wallet announced a string of
features that—to make the proposition more enticing—let mobile wallets
do things plastic credit cards don’t.
Google Wallet product managers say they will provide I.D. verification
so people can check in for a flight, download virtual boarding passes,
and even keep their driver’s license on their mobile phone.
(Google
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declined to say when these features would become available or how many people have downloaded the app thus far.)
Through its location-based GPS technology, it already sends shoppers coupons and real-time offers from nearby stores. Experts say these features should finally drive demand for the app. “It offers compelling convenience for consumers and retailers,” says Ben Woolsey, spokesman for credit-card comparison site CreditCards.com.
Just like the Apple’s
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forthcoming Passbook app, which is due for release with the iPhone 5
next month, Google Wallet will allow consumers to download loyalty
cards, money-off coupons and movie and concert e-tickets directly to the
phone. Currently, the app supports MasterCard, Visa and Discover debit
and credit cards and works in 200,000 locations nationwide.
“We want you to be able to leave your leather wallet at home,” Robin
Dua, Google Wallet’s head of product management, told a Web conference
this week.
Even when it comes to just making purchases, experts say Google Wallet
has key advantages over most traditional plastic credit cards. For a
start, Google Wallet can carry multiple credit, debit and store cards
from different issuers, says Michelle Barnhart, assistant professor of
marketing at Oregon State University College of Business.
And because it’s a smartphone app, it also has the potential to be a
virtual guide for customers in stores, directing them to the best
bargains based on their previous purchases.
To be sure, the convenience of the e-wallet could also encourage
shoppers to splurge. Previous studies have shown that people spend more
when they use credit cards instead of cash because they think less about
the value of their item. “Mobile wallets are even more abstract than
cards,” Barnhart says. “They are one step farther away from the reality
of handing over cash.” Google Wallet’s “single tap” feature—similar to
Amazon’s “one click” buy button—could also encourage more impulse
purchases, she says.
That said, it’s still early days for services like Google Wallet.
Thousands of merchants are still not set up for mobile payments, making
it more difficult for smartphone users to cut up their plastic. What’s
more, consumers are still concerned about security issues. One U.K.
survey found that 44% of people were reluctant to adopt mobile wallets
due to fears of phone hacking; only 17% of those surveyed say they would
use mobile wallets. (Google declined to comment.)
But not everyone agrees with that assessment. It’s simply a case of
technology trumping security, says independent retail analyst Jeff
Green. “Those using this technology, the bulk of whom are under 40 years
of age, care less about who knows their whereabouts or their buying
habits,” he says.
Woolsey of CreditCards.com says that most people are also prepared to
trade privacy for convenience. “In the digital age, privacy is becoming a
quaint and fleeting notion,” he says, “unless we all go back to cash
and pay phones.”
