On Monday, Google announced that it had closed a deal with three major wireless carriers to allow its Google Wallet to be pre-installed on their phones in an attempt to provide the mobile payments service with a big head start over the competition.
The deal was under negotiations since last week, but no one knew what exactly was Google up to, and why exactly did it negotiate with Softcard, a mobile payment app not very popular.
This week, the search giant announced that it would buy the intellectual properties of the less performing app and integrate it in its wallet service for mobile devices. Softcard is a joint-venture between AT&T, Verizon and T-Mobile, but it had recently recorded a decline, while it had also laid off many of its staffers.
Ironically, AT&T, Verizon and T-Mobile started Softcard as a means of avoiding Google’s mobile payment service, but now they are willing to install Google Wallet on their phones giving the websearch giant an impressive technological boost against the more popular Apple Pay service, which is currently available only on iPhone devices.
Market analysts claim that the deal already means that Google Wallet will be the standardized mobile payment service for all Android devices. However, Softcard will not just vanish right away. The company announced that its users will still be able to use the service, but it is expected to fade away as Wallet gains more popularity.
Amid concerns that Google’s move will open the doors for a monopoly on the U.S. mobile payments market, experts claim that although the deal is an important step for Google’s service, it won’t be the only option for Android users.
“The mobile payments space in the U.S. will continue to be competitive and fragmented for at least the next few years as various stakeholders vie to get traction with consumers,”
Bryan Yeager, an eMarketer expert announced in an email.
Recently, Samsung purchased LoopPay, a mobile payments technology that allows smartphones to use the magnetic-stripe technology in credit cards when initiating mobile payments. PayPal is also planning to enter the mobile payments business, while other start-ups may soon emerge.
Additionally, Google and Apple’s lead position is expected to be challenged by CurrentC, an attempt from big retailers such as Target, CVS, and Wal-Mart to get Apple Pay out of their way. However, the new mobile payment service didn’t roll out yet, but it will use a technology that would check consumers’ bank accounts before accepting the payment.
Image Source: AG Beat