Google rolled out two new products recently: Google Wallet, a payment system that eschews physical credit cards in favor of tapping your phone on a wireless card reader (just like those that work with wireless-payment key fobs), and Google Offers, a Groupon-like daily deals site that promises deep discounts and coupons for participating users.
The integration of Google Offers and Google Wallet makes for a compelling combination. Google Wallet offers a prepaid virtual “Google” card that can be filled through any normal credit or debit card, as well as the ability to connect with certain CitiBank cards from the outset. You can then pay for anything that takes the MasterCard PayPass system. The Google Offers app hooks right into this payment system, allowing you to easily apply offers during purchase – no more fumbling for receipts or proving your identity to dubious hosts. The additional convenience may prove compelling for users, especially those trying to reduce the number of things they carry around with them.
There may be fewer of those users than Google might like, at least at first. Google may have a much tougher time getting carriers to pick up Wallet chips than they did with the free Android operating system. Google launched Wallet with a single phone, the Sprint Nexus 4G. Other mobile carriers have their own Near Field Communication (NFC) technology in the wings called Isis, and are desperately trying to figure out how to turn it into another cash cow on the scale of the billions they generate in text-message fees. They’re unlikely to take this announcement well. Google won’t offer them the same outrageous cut of each individual transaction that they’d get if they were to go it alone, and it’s entirely up to them what hardware they will offer their customers. Faced with the question of whether a new phone should contain a Google NFC chip or one of their own that they can harvest larger fees from, Google will likely come out the loser.
That’s where Offers comes in. If the offers available in Google Offers and integrated directly into Wallet (or better, unique to Wallet) are compelling enough, it may push individual carriers to incorporate Google’s chips into their devices – but Offers has a long way to go and is off to a slow start. Google launched Offers with only Seattle turned on, though other cities are coming online soon. It will be very interesting to see the caliber of those offers, since they may forecast the fate of both services.
The comparison to Groupon might be masking a larger opportunity for Google. The easy tie-in between the payment system and the offers platform represents an opportunity to skip the Groupon model – and go straight for CPG products and department stores. Making a Google phone the easiest way to clip coupons and flow people inside department stores among a range of products, then easily apply them all to the purchase being made, represents an incremental value that could mean a lot to some users. That doesn’t appear to be how Offers is positioned right now, but nothing about the infrastructure precludes the possibility.