Google may be rethinking its Wallet strategy, cutting in carriers

by Phil Hornshaw

Things haven’t been going too smoothly for Google Wallet. The mobile payment service has hit a few bumps since its release, including a security hole that showed up earlier this month and since has been fixed.

But Google is reportedly still seeing slow adoption of the service, and is looking for ways to shore that up. According to a story from Bloomberg, Google is considering cutting in cellular carriers on its Wallet revenue in order to encourage more carriers to adopt the service and bring it to their Android devices.

Google Wallet is a payment service that allows users to store information about their credit cards, loyalty cards and other similar things that one might normally find in a wallet in their smartphones instead. The idea is that users have everything they need in one place. With near field communication technology found in some Android smartphones, users can just tap their phones to special terminals at retail stores and they’ve paid for their transaction instantly, because their phone sent the payment information to the register.

As Bloomberg notes, however, adoption of the service has been slow. Not all the U.S. carriers support it, after all. Verizon, for example, has cast its lot with Isis, a similar payment service being spearheaded by several credit card companies. Citing an unnamed source, the report claims that Google is discussing sharing revenue with AT&T and Verizon to encourage them to adopt the service and to carry more NFC-enabled smartphones to make it work.

Meanwhile, Bloomberg says Google is actively working on the other side of Wallet, which consists of creating partnerships with businesses and retailers in order to push coupons and deals to consumers. Targeting Wallet users correctly can get them into stores and using the service, which earns Google advertising money for the coupons – money it may well split with cellular carriers.

Google Wallet has been an initiative that Google has seemed to be excited about for some time, but it has hit some roadblocks of late. The tech giant recently shut down Wallet’s ability to work with prepaid credit cards because of a security liability that was discovered in the service. In the last few days, Google reinstated prepaid card capability with its app, and offered users $5 for the inconvenience. Still, it doesn’t seem as though the security issue didn’t help Google’s image.

The carrier revenue sharing plan may well help to push Google Wallet to more users, but the trouble really seems to be getting more NFC-enabled smartphones in users’ hands, and in getting them comfortable trading their wallets for just their phones. It seems like an easy transition, but Google will need to convince users that they don’t have anything to worry about if they trust their phone to protect their money.