After 10 months in the wild, Google Wallet isn’t exactly growing at a breakneck pace.
Only a few smartphones are currently equipped with the NFC technology required for the mobile payment app.
It’s only accumulated 14 retail partners that allow users to combine loyalty cards and store offers directly at the point-of-sale.
Because of the slow growth, Rick Oglesby, an analyst at Boston-based research firm, Aite Group, says, Google (Nasdaq: GOOG) is “in a bit of a re-evaluation pattern right now.”
And reports indicate that this re-evaluation directly involves the carriers.
Network Operators Need Incentive
You see, a shortage of NFC-enabled phones and slow adoption by retailers aren’t the only roadblocks Google’s facing right now.
It also lacks much-needed allies. Sprint (NYSE: S) is its only partner, and not only are the other three major mobile carriers not on Google’s side, they’re standing directly in its way.
Recall, back in December, I mentioned that NFC-equipped Galaxy Nexus smartphones running on Verizon’s (NYSE: VZ) network weren’t able to access Google Wallet. And although Verizon claimed that it wasn’t necessarily blocking the app, just working out some security issues, I still had my doubts.
Now, almost four months later, users still don’t have access (at least officially).
As a wireless industry consultant told Bloomberg recently, “Today, the operators have no incentive to adopt Google Wallet, given that they have their own ambitions in this space.”
And incentive is apparently what Google’s thinking of bringing to the table…
Bargaining With the Gatekeepers
In September, IDC predicted that more people in the United States will be accessing the internet through mobile devices than connected devices, including PCs.
And as Wall Street Daily’s Chief Investment Strategist, Louis Basenese, pointed out last week, “Cisco (Nasdaq: CSCO) estimates there will be 15 billion mobile devices in use by 2016. That’s more than double the current amount. And equal to two devices for every man, woman and child on Earth.”
So it’s not surprising that cash flooding into mobile advertising is about to explode. According to EMarketer, mobile advertising should hit $11 billion worldwide in 2016, compared to $2.6 billion this year. That’s a 323% leap in just four years!
Of course, Google’s already beginning to cash-in on the trend, with almost a third of its value coming from mobile advertising.
But with Google Wallet, it aims to expand its reach in the space by targeting consumers with offers and coupons based on buying patterns and current location. Simply put, shoppers strolling past American Eagle (NYSE: AEO) in the mall could receive a notification of a special promotion in the store. And use of that coupon would hand Google a cut of the sale.
Now, a few anonymous sources are reporting that Google’s planning to share the proceeds with carriers in order to entice them to get on board. And considering that this scenario would allow carriers to cash in no matter which mobile payment app gains the most support this year, I don’t see why they wouldn’t play ball.
If that doesn’t work, Bloomberg reports that Google’s also thinking of skipping the carriers altogether, authenticating payments over its own servers instead. The problem is that this would involve yet another hardware upgrade at retail locations, at a time when stores are already slow to adopt NFC-enabled terminals.
Bottom line: With Google Wallet growing at a snail’s pace and Isis inching closer to a launch date, it’s time for Google to seriously consider opening its coffers. Or else it could lose its lead in the mobile payment space.