Google (GOOG) is all set to expand the reach of its mobile/online payment system/service Google Wallet. In a latest attempt to boost the use of its, not much in use, payment system, the company is simply taking it out of mobiles and putting into the users' wallet by making it physically available.
On November 20, 2013, the company introduced new Google Wallet Card. Google Wallet Card is a debit card that allow users to use their Google Wallet balance.
Google Wallet is a digital wallet that securely stores the details of users' credit cards, debit cards, offers and more. The wallet allows its users to buy online, in stores, and send money. The Google Wallet app allows users to tap and pay at checkout through MasterCard PayPass by using NFC-enabled Android devices. It also allows users in the U.S. to send money through Gmail attachments.
Google Wallet card:
The newly introduced card Google Wallet Card works as any other debit card and adds all debit card features to Google Wallet such as instant withdrawal of Wallet funds through ATM. The card carries no initial (order or activation) or annual fee and is available to almost everyone in the U.S. who has passed through the identity verification requirements of Google Wallet. The cards will be supported by MasterCard (MA) and will work at millions of MasterCard® locations.
Google Wallet (without card service) serves the alternate payment market, which includes the online, mobile and contact-less payment methods. According to the estimates, the online payment market will be about $2,700 billion in 2015 from $740 billion in 2010.
After the launch of the Google Wallet Card, the company will expand its presence to a new payment market namely debit card payment market. According to Nilson, the debit card payment market is a fast growing payment market with a size of $1,824 billion in 2012 (see the chart below).
Google launched Google Wallet in 2011. Ever since the launch, the company is finding it difficult to popularize the payment system among users. According to a study* by comScore (see the table below), awareness among the users about the service was low as only 41% of the respondents knew it. Most worrying factor is the adoption as only about 8% of the respondents actually used the service. eBay's (EBAY) PayPal was the most dominant market player and was way ahead of the company in terms of adoption by users.
* The study is based on a unique research design combining comScore's opt-in panel of 1 million U.S. consumers and two separate surveys of more than 2,000 U.S. Internet users conducted in November 2012.
Despite being a two year old service, Google Wallet is still in its nascent stages of growth. The only thing that can bring growth is higher user adoption. It's highly unlikely that the company will make any profits from the service in near future. As for the time being, the company is only focusing on the user growth, that is why the company is offering the new feature (debit card) for free to its users.
The launch of Google Wallet Card will benefit the company in the multiple ways:
- Increased adoption:
The introduction of free debit card will make Google Wallet a much more attractive option for users as compared to other competitive services due to benefits such as:
- It will serve the online as well as offline needs of the users from single service.
- The service will allow user to aggregate the limits from various debit/credit cards and a bank account into the single card.
- The service remains a free service as the company is offering the card for free.
- Increased presence:
The higher user base will also increase the acceptance of the service among the e-commerce industry players and will increase its presence as an online payment option.
- Entry in the multibillion dollar market:
Google Wallet Card will allow the company to enter the fast growing multibillion dollar debit card market (explained above).
All in all, with the launch of Google Wallet Card, the company is all set to make its presence felt in the online payment market and debit card payment market. The inclusion of the new feature will make Google Wallet a much more attractive service for users and much more competitive service for competitors like PayPal, Visa (V), Amazon (AMZN), etc. An excellent long-term development for the company as the company is entering the new horizons of physical world.
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