Has Google Solved the Problem With Mobile Payments?

Have Google Solved the Problem With Mobile Payments?

Mobile money is big business, people are making more and more payments with mobile money services. People pay for goods and make payments to one another with ease through these channels.

For example, I've been paying my rent using an  Android mobile banking app that my bank provides. I also use it to pay friends and take payments from those in my contacts list via PayPal's mobile app. Mobile payments are most definitely here to stay.

However, Google had predicted this rise far before it arrived. They promised two years ago to "make your phone your wallet." In the end they haven't managed to do that, but that's mostly because of the restrictions levied onto them from phone manufacturers, wireless carriers and other payment providers – each of whom all want a slice of the payments pie.

Now though, it looks as if Google could have found a way around their problem in the simplest of ways: email.

From today, Gmail users in the US can attach money to their emails in much the same way you would attach a video, photo or document.

If a user links their bank account directly to Google Wallet, users won't incur a charge – thus encouraging more to sign up to Google's payments platform.

If you decide against linking the two together, you'll just end up having to stomach a 2.9% cost for using a debit or credit card through the service.

There's also a cap of $10,000 per transaction, so you can't shift massive amounts of money by the service.

How does this change the mobile payments space you ask?

Well, most NFC enabled phones – which is what the previous payments model Google Wallet would be utilising – also can receive and send emails.

The beauty of this is that you won't need to download a cumbersome app, learn a new interface, nor wait for a transaction to be processed. It'll all just happen like sending an email – a task that anyone who can operate technology from the ‘90s can manage with ease.

It also means that payments will be, more-or-less, frictionless.

While both sides will need a Google Wallet account, it's far more likely that they'll both already have a Google account – especially if they have a Gmail one – so activating it for Google Wallet will be effortless. It does away with the boundaries inflicted by other payment apps.

Gmail is also the largest email provider in the world.

This gives them great leverage in sucking up adopters to Google Wallet, meaning that not only can transactions be carried out effortlessly through Gmail, but the demand for operators to integrate and accept Google Wallet in their phones and stores will be massive.

It seems that Google could well have solved the problem with mobile payments rather quickly.

Do you think that Google's adoption of Gmail payments will have a profound effect on how people exchange money and make payments?

Is this the modern equivalent of the SMS mobile payments revolution?

Let us know by leaving a comment below with your thoughts.

Comments

  1. Christine Speedy

    No, I do not. Email is inherently insecure. I would be very leery to accept payment from a gmail address or using this method unless I was 100% certain of who the buyer was, and does anyone really trust Google with all their purchasing information? I think they’ll carve some marketshare, but I don’t think this will be the dominant solution.

    1. Author
      Vaughn

      That’s a very valid point Christine, however it’s worth noting that the payment comes from Google Wallet and Google Wallet approved users so it’s as secure as any other mobile banking solution or PayPal – which uses email to make direct payments but hides it behind the veneer of PayPal’s system.

      You do raise a good question though, what will it do to spam, phishing and other dangerous activities that happens to people’s email accounts?

  2. S Batchelor

    Interesting. Having worked with MPayments for a decade mainly in Africa and Asia, this solution seems to overlook the person without a bank account? The enormous rise of MPesa in Kenya, which now carries 1.6 billion dollars a month, was because it was an alternative to a bank account. Am I right in thinking that the google wallet only works if its connected to a bank account (and/or credit card)? (Or have I missed something) Africa may well be on basic phones at the moment, but Safaricom and others are pushing for uptake on smartphones. (And Google – if you read this – you are missing a trick if you dont think about a Bottom of the Pyramid payment system :)

    1. Author
      Vaughn

      Indeed, I think that Google’s solution to the P2P money transfer service is certainly aimed more at the banked Western market as that’s currently where Google Wallet is operating. Perhaps in the future they’ll expand once they’ve managed to take the payments arm of their business elsewhere, but for now it’s certainly an interesting way to get Wallet being used far more than it currently is.

  3. Santiago Minguela

    How will this work at retail locations? I don’t see a use at the supermarket, petrol station or department store. How does a consumer pay for a rental car or hotel bill upon check out? Moreover for bill payment, I don’t see how this improves direct bank debits. Even for P2P money remittance, there will be regulatory hurdles to overcome.

    For a mobile wallet to gain acceptance by consumers and retailers it must be easy to use, universal (from vending machines to high end department stores) and above all, it must lower acquiring fees for merchants.

    1. Author
      Vaughn

      I believe this first stage is to focus people on signing up and using wallet for direct p2p payments. From then they’ll hope more people begin to use Wallet on their phones as they’ve already been signed up and using it. Google’s future strategy seems to be trending that way as they’re closing down Google Checkout in favour of rolling Wallet out full-scale.

      Google always play the long game with their products despite the initial criticisms they get, so it’s worth waiting it out and seeing how they go on to utilise their millions of potential Wallet users. If half the Gmail users in the world signed up for Wallet it’d overshadow any current payments system out there.

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