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Google Wallet drives mobile payments adoption by adding more devices

Sprint Nextel will introduce at least 10 additional devices with support for Google Wallet this year, a crucial next step in driving adoption of Google’s mobile wallet.

The news came out of Mobile World Congress, where a Google executive said that in addition to the new devices from Sprint, the company is in talks with other carriers, handset manufacturers and stakeholders to continue to expand Google Wallet. The company also reported that with thousands of new transaction terminals being added every month, consumer adoption of Google Wallet is taking off, with usage strongest at convenience stores followed by fast food restaurants. 

“Clearly, it helps to have more than one handset in the market and could help with traction on the consumer side, but this is still just one mobile operator fully supporting Google, and the ability to use Google Wallet to its full capabilities remains limited by the low level of merchant adoption,” said Nick Holland, senior analyst at Yankee Group, Boston.

“It is a baby step in the right direction, but not a coup by a long stretch,” he said.

Broader availability
By putting Google Wallet on more devices this helps address one of the issues that the mobile payments solution if facing, namely that the offering is so limited in scope.

Sprint currently supports Google Wallet on the Samsung Nexus S and Galaxy Nexus. The LG Viper will be added this spring.

There is no word on when the additional 10 devices will be added this year.

Google also reported that 22 retailers now support Google Wallet.

Google Wallet is available at retailers in five markets – including Subway, CVS and Walgreens. Together, these retailers have a significant number of retail outlets.

Despite these developments, Google Wallet faces several challenges, including the fact that two key members of the team recently moved on from Google Wallet.

The company also recently had to contend with revelations of security flaws in the Google Wallet mobile payment app that potentially let hackers access consumer accounts.

It is also dealing with the fact that NFC technology is still a few years off before it comes widely recognized and used.

Next steps
To address its challenges, Google should consider partnering with Isis or developing a cloud-based wallet solution that can be accessed via any handset or POS terminal, such as PayPal has done, per Mr. Holland.

“Google needs to look long and hard at its current wallet strategy,” Mr. Holland said. “They are up against a wall with very little likelihood of scaling on the three other major mobile networks in the U.S. unless they abandon the Isis project.

“[Google and Isis] are actually after separate things,” he said. “Isis wants SIM rental revenue from storing cards in their wallet, and Google wants information on consumer behavior in the physical world.

“If they can put their egos aside for a moment, maybe there is room for a joint venture.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York