I rode about 900 miles in the last four days, cutting across Virginia, Maryland, Pennsylvania and New Jersey to be together with my family for Christmas. I figured this would be a good time to put my new Galaxy Nexus and the Google Wallet app through its paces. Following are my impressions from it, which as a whole was very cool and satisfying. But (and there is always a but..) it also brought to surface some serious handicaps, which though not Google’s fault, could bring its wallet initiative down like a lead balloon.
Three days after Verizon launched Galaxy Nexus topped with delicious Ice Cream Sandwich to boot, thanks to a bunch of tenacious Android aficionados, I had thumbed my nose at Verizon and got Google Wallet running on it. Despite all the wrangling and public airing of differences between Verizon and Google, it took me all of 60 seconds to download the .apk and to get it going. Much ado about nothing, indeed.
The first thing you notice while launching Google Wallet is how purty it looks. Upon entering a previously agreed upon 4 digit PIN, it allows you in and Payment Cards, Loyalty Cards, Offers & Transactions are all at your finger tips. I set up my Citi World Dividend card and the Google Prepaid Card that comes with a $10 infusion courtesy of Google (Thanks GOOG!).
The first transaction at a McDonald’s equipped with MC Paypass terminals went without a hitch. Paying by Google Wallet was unquestionably new and cool to both of us. Just to be difficult and out of sheer curiosity, I completed two transactions – one each via Citi and the Google Prepaid card. Emboldened by how smooth it went, I pulled out my phone every chance I got during my roadtrip, and provided the retailer had a PayPass terminal handy, went ahead and paid using my phone to hushed tones of awe and envy. My inner 8 year old had a field day!.
The Google Wallet app is solid. It abstracts the complexity and ugliness of payment and renders itself fluidly on the Galaxy Nexus (albeit with a bit of slowdown at times when swiping between cards). It worked consistently every time, whether the Wallet was open or not. One time, the store clerk did not even know it was a tap and not a swipe, or she did not care (or maybe her last customer was the Pope). But plain as my transactions were, they did not seem to require any employee training as long as the customer was savvy, and the experience was frictionless to a fault. Admittedly, when one throws in a couple of coupons – digital or otherwise, or splits a transaction on to two credit cards – one plastic for example, you could see complexity creeping back in to the experience. But for 95 percent (arbitrary as they come!) of the transactions, they should go flawlessly.
Google Prepaid Card:
Moreover, the Google Prepaid card is a brilliant idea from Google’s perspective. In fact, instead of being handicapped by NFC at the point of sale, Google should have preloaded its wallet with $10 and encouraged everyone with a half decent Android phone to install and make online payments with Google Wallet. I have already played this tune once before, so I won't attempt it here. Another advantage of a Google Prepaid card will be when Google, as it finds working with issuers more trouble than it's worth and merchants apathetic to bearing cost of upgrading to contactless infrastructure while being stuck at the same interchange fee structure, could energize merchant adoption by offering an interchange-free model, provided customers use Google Prepaid card to pay at the point of sale. Google can incentivize this on both fronts, merchant and customer, alike and bring on the fabled mobile commerce tipping point far sooner than it is now.
And finally, Google Wallet in its current state is only a first step towards a future where payments and customer/merchant interactions are driven by mobile wallets. But for mobile payments to be meaningful, beyond simply enabling payments at the point of sale, they have to enable one or more of the scenarios outlined below. I am quoting these verbatim from the whitepaper I produced earlier this year and which can be downloaded here. These perceived interactions simply constitute a shape of things to come, but must come none the less.
- Indicate to the customer how many rewards points she stands to gain by completing the purchase.
- Provide a transaction summary right away along with any rewards points accrued or redeemed as part of the purchase
- Allow the customer to redeem his rewards points instead of cash/credit at the POS and abstract all the complexity of that redemption from both the customer and the merchant
- Indicate to the customer if she so prefers, for a given retail category, where she stands for that current month in terms of expenses (e.g. $150 in Gas, $200 in eating out etc.)
- Warn the customer if she has insufficient funds to clear the transaction. Or better, if the purchase will in turn overdraw the account so that any scheduled bills or checks would not clear, then warn the customer.
- If the customer has one or more credit/debit cards with the bank, then default to the card that will provide the maximum value, in terms of rewards accrued or a favorable interest rate. Or pick a credit card that has a coupon that could be applied to this payment. Allow the customer to choose if there is more than one.
- Issuance of value stores including prepaid debit cards that automatically unlock to release funds when in proximity to a particular store, location or when used for a specific retail category.
- Use location and the purchased item as context and suggest to the customer a recommended accessory to her purchase at the same or a nearby store.
- Use location and time of day along with the social graph of the customer to recommend new retail experiences.
- Use past purchase history along with frequency of purchases on specific retail categories to deliver localized offers from nearby merchants.
- Provide couponing capabilities that just works – including picking the right coupon at the POS without the customer having to remember.
- If the bank deems the purchase amount to be significant, and requires that the customer credit limit to be raised, then it should do an STP (traight through processing) and ask the customer whether to raise her limit.
All of the above interactions require a leap of faith by wallet partners, a commitment that goes beyond what they are willing or able to commit today. But without it, Google Wallet, Isis and other initiatives will reach for, but never truly, connect.
Now that I talked over what works, lets talk about what does not.
Broken & needs fixing:
Google Wallet is all Google
Now that may not be a bad thing, if it were a solution that had been built ground up by Google. But, it is not. The payment rails that Google Wallet runs on is several decades old and its effort to leverage off of it comes across not as incremental, but instead as a total rebranding effort. That, for obvious reasons, is seen as an affront to the broader payment industry, including possibly Google Wallet partners and is apparent in its failings as I describe below.
Closing the redemption loop has been the holy grail in local commerce and mobile has long been touted as the missing link that could make it happen. But if the current Google Wallet app is any evidence, we are a ways off. Offers are off to the side on another tab, instead of being front and center. In fact, if there was any offer that might have been applicable at the retailer I was patronizing at the moment, I would have had to dig through the offers tab to find it. And to expect me to do so at the point-of-sale, would have been anything but frictionless. Instead, when I bring up Google Wallet, regardless of what my default credit card of choice may be, the wallet app should overlay any applicable discounts or offers on top so that I can choose a different card to pay that will net me more rewards, more points, and possibly cost less money. But to also successfully do so, it has to know which retailer I am at, and therein lies the core issue discussed next.
Transaction History shows merchant and price paid for only transactions made using the Google Prepaid card, and not for my Citi credit card.
This is what threw me for a loop. For Google Prepaid transactions, the merchant name shows up in a few minutes, but the Citi transactions show “PayPass Merchant” for merchant name and “Sent” (????) for amount paid. It seems that Citi, the only issuer backing Google Wallet, opted NOT to share merchant and paid information with Google in the first large scale, tangible mobile payment initiative in history. If that does not reek of mistrust, I don’t know what does. Whatever may be the reasons behind such a move, Citi, in my opinion, has seriously handicapped the Google Wallet app by depriving it of any meaningful value the customer can derive out of using mobile as the new payment form factor. If my only thrill is to whip out a phone instead of plastic, tap instead of swipe, and the end result is the same, then why all the hoopla? When I check my transaction history, if all I see is “PayPass Merchant” and “Sent” row after row with respective date and time, how meaningful is that compared to printed receipts and monthly statements?
Citi may feel all smug about removing (or at the very least delaying) the threat of disintermediation from its partner and a potential disruptor. But by doing so, it has proven its lack of commitment to every new issuer who intends to potentially partner up on Google Wallet and its cries for interoperability and trust will land on deaf ears. I am interested in hearing about whether there are any legal ramifications about sharing transaction information with Google when it is playing the role of a facilitator. (If you have any perspective other than mine, kindly comment below). Citi has also de-clawed another value-add – in this case MasterCard’s InControl service which could potentially provide instantaneous feedback to the customer after purchase as to how they are faring in individual retail categories ($200 monthly limit for eating out vs $150 for Gas) so that they can manage their household budgets better. If I need to wait till the end of the day, or worse the end of the month, for that sort of feedback, then let me ask once again – why all the hoopla about mobile payments?
Moreover, this is a bump in the road for Google. Google can still look at aggregates, the number of transactions from a specific location and marry that with its extensive geo-spatial POI data to arrive at some very close educated guesses as to who the merchant is. With its efforts to provide indoor mapping and location based services getting less battery thirsty, in time Google will be able to do most of what it needs to do. But we consumers, the schmucks who completed the transaction, are stuck at “PayPass Merchant” and “Sent”. Zero context, if you ask me.
Its like throwing a chick off a cliff with its wings taped together screaming – Fly! Dammit! Fly!
If I could recommend then for both consumers and merchants alike, I would recommend that they skip over Citi and use the Google Prepaid card for their payments if they want any meaningful transaction history. That is not to say that Google should keep it as it is – it should leverage history to both provide context as well as recommend new retail experiences, all the while being respectful of my privacy. And Google should make its prepaid platform appealing for merchants to adopt and incentivize the same for consumers through tailored discounts and offers. As it is right now, Citi is not the shining example Google needs to bring more issuers onboard. Citi may be forced to reconsider if Google is able to either get enough issuers onboard who are willing to share, or can build enough customer participation to force Citi’s hand. Both are up in the air at this point, and may never come to fruition. And customers who, unlike me, are comfortable using an existing payment provider over Google, will never experience the benefit of mobile payments beyond the act of payment. And that’s a shame.
In closing, is this evidence of a clash of cultures between a payment oligarchy and a possible disruptor? Of wanting to protect one’s turf and yet be seen to customers and others as a first mover? Customers are pretty discerning these days and they can spot a fake from miles away. We can distinguish commitment from when you are throwing a chick off a cliff with its wings taped together screaming – Fly! Dammit! Fly!. For my part, I loaded $20 on to my Google Prepaid Card via my Bank of America credit card as I made my new year resolution a few days early: that I shall use a Prepaid account till Citi gets its act together. Or until, Isis knows better and tries harder.
Citi, are you listening?
Cherian is a Mobile Payments Advisor with Experian Global Consulting. He is also an advisor to ModoPayments. As a mobile payments veteran and founder of Drop Labs, Cherian has worked with leading banks, retailers, mobile platform providers and startups in this space. Opinions expressed here are strictly his own, not that of Experian.