It has been 96 hours (give or take) since the Google's announcement that rocked the mobile payment space. During that time, I read literally dozens of news reports and blog posts to help me understand what this announcement really means. Incidentally, I found a great article that explains how this partnership will work.
Here is my take.
- The embedded NFC chip in phones is the most exciting part of the announcement. In order to get mobile payments off the ground, NFC chips must be embedded in phones (unless we all want a sticker on our phone – ugh!). We got step closer with the Google announcement and will now wait for Apple's inevitable announcement on the same point.
- Google got their mobile payment architecture right. The focus on existing providers (i.e. MasterCard, Citi, First Data) is the way to go. Reinventing the payment verification and settlement process is not smart and Google avoided that.
- Vendors can now start innovating. The embedded NFC chip and associated standards will do for mobile payments what the embedded camera did for mobile deposit. It gives an innovative vendor the opportunity to take advantage of a technology well integrated in a mobile device. The winner here is not Google (from a mobile payments perspective at least), but instead the next "Mitek Systems" that will take that embedded chip to develop a mobile payments service.
Banks and card companies should thank Google and Apple for providing an important cog in the mobile payments space. The embedded NFC chip is here, now let's move on.
Google further injected themselves in the payments ecosystem in order to generate revenue around targeted promotions, but frankly they are not needed there. The most customer friendly solution for mobile payments is one similar to mobile deposit where a vendor develops a mobile payments application that can be imbedded within an existing bank or credit card moblie application. If this is done correctly, it will not only drive utilization by eliminating the need to "set up" mobile payments by downloading a new app, linking accounts and entering card information, but also it decreases security concerns since it will be managed by a customer’s existing financial provider.
Additionally, there is a huge potential opportunity for banks and card companies to deliver on the role Google wants to play in the mobile payments by providing a venue to deliver targeted promotional offers. Banks and card companies don’t want (and frankly don’t need) Google to enable this as they already have vendors like Cardlytics, Billshrink, Segmint, and FMN Technologies delivering this role in a limited format already at banks like Regions Bank that could be expanded to cover similar functionality around mobile payments.
Agree, disagree? I would love to hear your thoughts.