Google Planning to Buy Mobile Payments Service Softcard Amid Fierce Competition
Softcard is under the ownership of several US telecom firms including AT&T. The search engine giant is keen on acquiring the struggling payment service for an estimated $100m.
According to market analysts, Google’s purchase of Softcard could usher in a new era of competition between the search engine and major market players such as Apple whose new mobile wallet Apple Pay is steadily attracting users.
Google’s determined effort to become a major player in the mobile payment space underpins the global movement toward increased e-commerce interactions between businesses and consumers. Market observers predict that the e-commerce market will become a $1.5 trillion industry by the end of 2015.
Mobile telecom carriers already have a revenue-sharing model with Google, making it more lucrative for them to team up through Softcard than for Google to attempt to acquire PayPal. The revenue that Google acquires from its Play Store and Android phone searches are split between the search engine and the partnering mobile carriers.
Apple’s fierce competition
The search giant is admittedly lagging behind its competitor, Apple, which is expected to dominate the mobile wallet scene. Apple Pay allows iPhone 6 users to pay for goods and services by connecting their mobile device to their credit or debit card. Since its inception, Apple Pay has proven to be quite popular among retailers and iPhone 6 users.
On the contrary, Google has struggled with its Google Wallet service, which it launched almost four years ago. Lack of cooperation among mobile operators and very limited interest from consumers has been a major obstacle for Wallet’s success.
Will Softcard put Google ahead?
Softcard is a pet project by T-Mobile, Verizon and AT&T, leading mobile operators who were trying to get into the growing mobile payments business. However, merchants and consumers have failed to embrace the new payment service. The operators hope that the company would gain greater acceptance under the tutelage of Google.
Newer startups are also putting pressure on the search engine to start making headways into the bourgeoning mobile payment sector. For example, Stripe, a San Francisco-based startup raised $70 million and is now valued at $3.5 billion. Adyen in Amsterdam is also a promising mobile payment company that investors have their eyes keenly on.
Even then, it is going to be a steep curve for Google to dominate in the mobile payment space given the popularity of its main competitor, Apple. Apple already has an iTunes customer base of 800 million, giving it a head start in mobile payment.
Mary Monahan, director of research for mobile at Javelin observes that, “A lot of people are expecting Apple Pay to be a game changer with its inclusion of NFC in their latest mobile device.”
It is not yet known when Google will finally close the deal to acquire Softcard.
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