Google's Softcard hookup: Never mind Apple Pay ... it's about beating the networks

Good summary, here is some extra color

My credentials: I worked for France Telecom's R&D, hold one patent on online micropayment systems and deployed a successful one in the early days of the Internet (1997 or so).

There are 2 prizes they were all contending for: the ability to skim commissions from all mobile payments, and the ability to mine customer transaction data.

The banks (well, credit card issuers) own both in the current credit system. They have historically been extremely paranoid about telcos, and successful m-payment initiatives like M-PESA in Kenya (with which Vodafone essentially disintermediated the banks and corrupt government) certainly stoked that.

Google obviously hungers for #2, #1 being mere cherry on the icing.

The handset makers had a much weaker position, as in the US at least the telcos are their biggest customers and hold the whip hand, as demonstrated by Nokia's failure to penetrate the US market to the same extent as worldwide.

Apple never entered the fray until Apple Pay, unlike some of the Android handset makers. Apple Pay essentially implements banking industry standards on the banks' terms, for a very modest commission. In other words, they cut a deal with the banks to get an acceptable #1 and forgo #2, and in the process gave the banks a way to snatch victory from the jaws of defeat at the hands of Google or the carriers.

In the West, iPhone users are the choice demographic in terms of spending power, and I expect Google will have to cave to the banks' demands and implement a form of EMV tokenization similar to Apple's. It's unclear whether they will be allowed to ingest transaction data. The carriers have already bowed to the inevitable.

Insecurity

One of the major problems of many competitors of Apply Pay is the competitors avaricious desire to cumulate vast amounts of personal payment data in essentially one place. This makes a target worthy of a major cracker assault, and given corporate desire to pay the least to the workers protecting the data, inevitably the data will be stolen sooner rather than later.

MCX is even worse, they require bank account and/or debit account information in an effort to also avoid or reduce interchange fees, the net result being the huge clump of data would ALSO contain millions of bank account attack vectors. This isn't credit card vectors, this is bank account routing numbers useful for purloining the contents of checking accounts of the sheep and is potentially much harder for the wronged to right.

It appears that Google would (or should) attempt to emulate the security of Apple Pay ("see no customer data that an be used to raid said customer's pile-o-cash") but skim off the useful bits for peddling ads. It would be interesting if Google declines to monetize the payment path-- which will attract the financial players-- but only monetize the ad peddler path. This might actually work since most everyone is used to being pelted with ads.

Behind the Times

Unbelievable, it's all tangled up in self interested money grabbing. The one thing you can be sure of is that it will ultimately cost the consumer more to use it.

And what's with all the arguing? If you pop over to Japan a very large proportion of phones can do Suica (contactless payment system originally for the trains but seemingly everywhere else too now) and it's entirely normal and has been for years. How on earth have they managed to decide what to do, design it and implement so long ago with apparently very little fuss?

We're still at the arguing stage, like a bunch of ten year old kids.

Can the banks stop Google from collecting customer purchase data?

I suppose if they put it in the contract, but what is Google's incentive to cooperate with them if that's the case? Maybe they decide they want to cut the banks/payment processors out of the loop entirely and go their own way. Google Wallet starts using "Google Credit" instead of linking to a bank card, and you pay your bill each month just like a credit card.

Google will go to any lengths to get their grubby hands on this data, it is the crown jewel for their ad pushing empire. Imagine how much more advertisers would pay to not only find out what people search, what ads they click on, and what websites they visit, but also which of those searches, clicks and visits TURN INTO PURCHASES!

They can easily get retailers to put payment terminals in that would work with Google's payment system - give them the equipment for free, and waive the interchange fees! Google would make more money mining people's purchase data given that they already have so much other data about what people do leading up to a purchase that they could eat those costs, and deal a crippling blow to banks. Well, in theory, if they get customers to use it - but that's easy, just like they got customers to use Google's payment thing a few years ago - bribe them too! Everyone used Microsoft and Google's payment system for a hot minute 10 years ago because of the freebies, and everyone quit using it the minute the freebies went away. Google can probably afford to keep up with the freebies though given how much purchase data will be worth to them.

Glad I'm watching this one on the sidelines, and won't have to worry about Google finding out what I buy!

ISIS? Really?

>ISIS had already been forced to change its name....

No shit!

Weaker side?

A little stumped as to why Google would be characterized as the 'weaker side' here - in pure market share terms, Android is massively dominant world-wide, and the iPhone's successful premium price strategy runs completely counter to Apple Pay's chances of widespread adoption..

Google is likely to win this, simply because an E-Wallet system that comes free with 85% of smartphones is going to be more used than one that comes free with 12%. ApplePay might do well in the US, where the iPhone has relatively strong market share, but internationally Google's version will be ubiquitous and anyone who happens to travel will quickly find ApplePay restrictive.

If Apple wants to make Apple Pay the go-to replacement for cash, then it either needs a low-cost, high-availability item to run it from (the Watch, perhaps, though everything presently points to it being almost as overpriced as the iPhone), or it needs to break into that massive Android marketplace (not likely when confronted with a built-in alternative).