Apple Pay may be the new comer to the digital wallet game, but its fast-growing popularity is ramping up competition in the mobile payment market in a big way. That has Google taking note, and it underscores the Internet search giant's failure to drive interest in Android-based smartphones for wireless transactions. Apple Pay's success is also good news for Google Wallet because now it's finally getting some notice.
Google Wallet owes Apple Pay a big thank you
Apple Pay is Apple's system for processing credit card transactions without needing to swipe an actual card. Instead, it uses an NFC chip in the iPhone 6 and iPhone 6 Plus to communicate with specially equipped card readers, and it has the benefit of being more secure than the old-fashioned swipe-and-sign system we've used for decades.
What Apple is offering isn't anything new. In fact, Google offered the same thing a couple years earlier through its Google Wallet feature on Android smartphones. Google Wallet didn't, however, take off like Apple Pay and the average smartphone user didn't even know it was an option. Google also failed to get retailers on board, so stores where Google Wallet was even an option were few and far between.
With the official launch of Apple Pay in November 2014, however, that all changed and now banks and retailers alike are interested in smartphone-based payment options.Since Google Wallet and Apple Pay both use the same NFC technology to initiate transactions, Apple's success is turning into Google's, too.
Right now, Google Wallet isn't as mainstream as Apple Pay, and without some help it probably won't catch up. Google is apparently working on that right now by trying to swing a deal to buy Softcard—the company started by wireless cell service providers to take on Google Wallet and Apple Pay.
Softcard is currently owned by Verizon, AT&T, and T-Mobile USA, but hasn't been a big success. The company laid off over 60 employees last week, according to the Wall Street Journal, and is actively looking for a buyer. Sources say that buyer could be Google.
Assuming a deal does come together, Google has the resources to give Softcard a shot in the arm and keep it going, plus it adds to the Google Wallet arsenal in its fight to beat Apple Pay.
That said, Google doesn't need to beat Apple Pay to win at the mobile payment game. This isn't a Highlander market where there can be only one. The current state of the creditcard market proves that nicely.
Instead, Google needs to find a way to grow along with Apple Pay, and that's something it may be able to manage with Softcard under its wing. None of the companies involved have confirmed the talks are happening, but it's likely they are. Google already has a revenue sharing deal in place with the wireless carriers, so it's an easy jump from there to owning Softcard outright.
What's interesting is that Google couldn't get smartphone payments to go mainstream, and Softcard hasn't been able to make a serious go of it, either. Once Apple jumped into the game, however, everyone is suddenly interested in paying for their groceries with their iPhone, and that's what will give Google Wallet the boost it needs to really grow.
Google should send Apple a fruit basket.