Google, Discover to announce joint payment method (UPDATED)

Oct. 22, 2012 | by James Wester

(UPDATED) Discover is at it again. The smallest of the big four card brands has been active in the mobile payment space through a number of partnerships, most recently its tie-up with PayPal. Today it has another partnership to announce, this time with search giant Google.

Sources familiar with the news said Google and Discover will announce a joint credit card product today, branded with Google but using Discover's network to process payments. The card will integrate with a customer's Google Wallet account and provide users with a plastic alternative where a merchant doesn't accept NFC-enabled mobile payments, the sources said. It also will give Google Wallet users who don't use the app for mobile payments a way to tie their online payment method to brick and mortar transactions.

The announcement, along with details on the product and how it will be issued, will be provided at the Money 2020 conference in Las Vegas. Osama Bedier, the head of Google's payment efforts, will present the information at the conference this afternoon. (See update below.)

Google recently rebooted its Google Wallet to move payment credentials from a mobile device's secure element to the cloud. That lets users load any of their payment accounts into the Google Wallet. Once loaded into the account, the credentials are then connected to a Google Wallet virtual prepaid account to actually handle the purchase at the point of sale.

The new payment card will work in a similar fashion, acting as the actual payment credentials at a point of sale, and traveling over Discover's network, but linked to whatever payment method the user has on file in a Google Wallet account.

The sources said Google will be "renting" Discover's network to process payments, likely offering a small percentage of the transaction fee to the card brand. But more importantly for Discover, it will now have access to the valuable sales data that would have gone directly to the issuers of the payment cards Google Wallet users have on file. What data Discover will then pass along to the card issuers is unknown, but it has now successfully inserted itself into those transactions.

That Discover is working with Google on this effort shouldn't come as a complete surprise. As mentioned, Discover has already partnered with PayPal, opening up a network of 7 million Discover-accepting merchants to PayPal's offline payment method. Additionally, when Google rebooted its wallet, it opened the app to credit card issuers to let them provide their card artwork so users can visually identify an account on their mobile devices. The first card brand to integrate its cards and artwork into Google Wallet was Discover.

Update: The expected announcement from Google turned into an announcement of an announcement. Osama Bedier, in his keynote address at Money 2020 in Las Vegas, said only that Google will be rolling out a new version — a true Google Wallet 2.0 — sometime in the next month. While Bedier didn't mention the Discover deal specifically, attendees at the event said Bedier promised a new version of the digital wallet product will include a number of new features.

Sources familiar with Google Wallet 2.0 have said one new feature is a peer-to-peer payment method allowing users to send and receive funds between devices. The new feature will possibly even integrate with Google Checkout allowing merchants to use Google Checkout in the physical world in a similar fashion to other mobile point of sale solutions like those from Square and VeriFone.

In his address, Bedier also seemed to hedge a little in his support for NFC. While not discounting the importance of NFC to certain transactions and use cases, Bedier said other technologies like barcodes may have a place where NFC devices aren't available.

As always, more details as the story develops.

For more stories on this topic, visit the Carriers/Card Brands research center.


Topics: Carriers / Operators , Contactless / NFC , Mobile Apps , NFC

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