- Google has partnered Square to launch Google Plaso; a Bluetooth based mobile payment service.
- Google has reportedly been testing this service at various brick and mortar stores.
- Google will face barriers in matching the convenience and security of Apple Pay, prime reasons for its runaway success.
Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOGL) have been at each other ever since Google got a hold of the smartphone OS market with the launch of Android. The war has taken shape of various battles, ranging from patent wars to dumping of Google search by Apple. Apple, last year, dumped Google search by making Bing the default search engine on its Safari browser, in a move aimed at striking Google’s biggest cash cow; online search advertisement dollars. Another of Apple’s latest strike was the iPhone 6, striking at the heart of Android’s near monopoly in the large screen smartphone space. No wonder the iPhone 6 models are selling like hot cakes.
Online mobile payments space has become the latest battleground for the two tech giants. Google has partnered with Square to launch its latest attack on Apple in the form of Google Plaso, rumored to be Google’s competitor to Apple Pay. However, the mobile payments battle can be traced back to 2011, when Google had launched Google wallet using NFC technology to make mobile payments.
Google wallet failed to become a mainstream service and is, even today, restricted for use in the United States. Google wallet failed primarily due to Google’s terms with supporting banks, which meant that the banks would have to share purchase info with Google. The banks were unwilling to share user info with Google, which has been a major reason for the slow adoption rate of Google Wallet. Another reason was the small presence of NFC enabled payment terminals at the time Google Wallet launch and also stiff competition from Softcard, a payment service launched by A,T&T (NYSE:T), T-Mobile (NYSE:TMUS) and Verizon (NYSE:VZ). Softcard used carrier issued sims, which blocked Google Wallet on the Android devices.
Apple entered the mobile payment service with the launch of its NFC based Apple Pay service. Apple pay turned out to be a runaway hit, as the service saw over a million card registrations within 72 hours of launch, making it the largest mobile payments system.
Google’s rumored partnership with Square is Google’s attempt to claw back and gain lost ground from Apple, after having miserably failed with Google Wallet in the mobile payment space. Google Plaso is rumored to be based on Bluetooth technology, rather than NFC. Per a post on business Insider, though Plaso could be integrated with Google Wallet, Google will have a hard time matching the security and convenience of Apple Pay.
Mobile Payments: A Rapidly Growing Market
The battles in the mobile payments space raise an obvious question. Why are both Google and Apple interested in the mobile payment space? The answer lies in the rapid growth of the mobile payments market.
One look at the growth of online mobile payments answers why both Apple and Google are eyeing a significant piece of this pie. The online payments market is expected to double over the next three years to hit $721 billion in 2017.
The mobile payments transactions are expected to grow at a compounded annual growth rate of 30% over the next 3 years. The number of mobile payment users is also on the rise, expected to rise from 323 million users in 2014 to close to 450 million in 2016.
To sum up, Google is rumored to be launching a new service Plaso to facilitate in-store mobile payments, as Google attempts to fight Apple Pay. However, lack of details makes it unclear as to How Google will monetize the service or whether the service will even see a commercial launch. For now, Google doesn't have a convincing answer to Apple Pay and is losing ground to its rival in this battle in the mobile payment space. You can also see our latest Apple stock analysis videograph and Google stock analysis videograph post their latest earnings releases.