Tuesday, September 20, 2011

Google Wallet - Mobile Payments Finally Arrive. Sort Of.

With the Google wallet, released yesterday, mobile payments on smartphones have arrived!

Well, only on the Sprint Nexus 4G.  Only with a Citibank MasterCard (or Google PrePaid, though others are coming).  And, only with MasterCard Pay Pass merchants (which does include biggies like Bloomies and Macy's, megachains like Foot Locker, Radio Shack, and Toys "R" Us; big drugstores like Walgreens & CVS Pharmacy, fast food outlets like 7-Eleven, McDonald's, Jamba Juice, and Subway; and big box stores like Best Buy and Home Depot.)

Google Wallet allows users to store credit cards, loyalty cards, and gift cards - and to receive and redeem loyalty and sales promotions - on their mobile phone.  Yes, it's kind of like your physical wallet.  The big enabling technology is NFC, "near field communications" that allow secure payments by simply tapping the phone on any PayPass-enabled terminal at checkout.

Experience suggests that the faster the merchant throughput, the more valuable the technology will be.  For example, fast food and convenience stores (and supermarkets, and gas stations) have always led the way on innovative payment systems.  But it only takes a moment's reflection to imagine what this could mean at a store like Home Depot, with its excruciatingly slow point of sale.  And, the value that this offering could add to a banking customer relationship, with the right kind of customer.  I am reminded of the advent of ATM machines, which were thought of as a huge cost to reach what were considered marginally profitable customers.  Of course, analysis showed that early ATM users used more banking services and were highly valuable relationships, and today no bank would dream of operations today without them, as the ATM itself becomes more functional and a richer experience.

Google will add VISA and Amex in the coming months, and other Android phones will start shipping with NFC chips, and other carriers will start lining up.  When the next iPhone ships next month, it's gonna have NFC.  Then, let's see where Apple can drive.  Like, straight to the heart of the early adopters.

So.  What does this mean for you, and your bank?  If you don't already know which demography and Tapestry segments are driving mobile usage - and social networks - hurry up please, it's time.  Your GIS awaits.