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Google-Softcard deal notwithstanding, Android payments still an open field

Google is teaming up with Softcard in the hopes of positioning Google Wallet as the leader in Android mobile payments, but it is likely to face a number of competitors.

Rumors have circulating for several weeks that Google and Softcard were interested in combining forces, with the final deal involving the acquisition of Softcard technology and capabilities as well as an agreement that will see Google Wallet come pre-installed on Android phones sold by AT&T, T-Mobile USA and Verizon Wireless. However, with significant future revenue likely at stake, a number of other companies are also likely to seek a dominant role in enabling mobile payments for Android users.

“Android remains wide open for mobile payments,” said Jordan McKee, senior analyst for mobile marketing and commerce strategies with Yankee Group, Boston

“The introduction of HCE ensures a variety of players, running the gamut from issuers to merchants to device manufacturers, will be aiming to grab consumer mindshare as we move forward,” he said.

Enhancing Google Wallet
Under the terms of the deal, the Google Wallet app will come pre-installed on Android phones running KitKat or higher that will be sold by the carriers in the United States later this year.

The technology and intellectual Google has acquired will be used to make Google Wallet better, according to the company.

In a post about the deal on the Softcard site, the company reports that its customers can continue to use the mobile payments solution “for now.” It also states that more information will be available to customers and partners in the coming weeks.

The speculation is that Softcard will be phased out.

Mobile payments landscape
Softcard, which was previously known at Isis, was founded in 2010 by AT&T Mobility, T-Mobile USA and Verizon Wireless to leverage NFC technology for tap-and-go mobile payments. However, a pilot program was not launched until the fall of 2012 in Austin, TX, and Salt Lake City, UT.

At the same time, Google Wallet was also trying to build a presence with NFC payments. However, with the founding with the mobile carriers behind Softcard blocking the use of Google Wallet on the Android phones they sold, adoption struggled.

With a lack of retailers jumping on board, drumming up consumer interest has been a challenge for Softcard as well.

In fact, overall mobile payments adoption has been building more slowly than expected, but this has not stopped a variety of companies from betting on mobile becoming a major payments driver in the near future.

Following Apple’s launch of Apple Pay in the fall of 2014, it became clear that competing for iOS users would be a challenge, but that the Android market was still wide open in terms of having a payments leader.

Host card emulation
Google developed cloud-based Host Card Emulation as a way to enable tap-and-go payments without the need to access the secure NFC chip that was being blocked by wireless carriers.

While Google now seems to be returning to NFC as a major driver for its payments strategy, card issuers, merchants and handset manufacturers could also leverage HCE to play a role in Android mobile payments.

“The land grab for supremacy in the Android payment ecosystem marches on, and Google wants to ensure Wallet becomes the de facto means of conducting transactions outside of iOS,” Mr. McKee said.

“Despite Google Wallet’s numerous pivots and missteps, the acquisition and inevitable sunsetting of Softcard will play a key role in reducing fragmentation in Android ensuring Google’s consumer reach is greater than ever been before,” he said. “Lack of operator cooperation has long dogged Google, but with it, expect a stronger and more capable Google Wallet.”

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