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Why Google’s payments strategy isn’t working

Google has been trying to make waves in payments for a long time now. Google Checkout was launched in 2006; Google Wallet in 2011. Businessweek did the numbers and found Google spent ~$300M acquiring different payments startups in recent years. But for all the product launches and engineers, there isn’t much traction to show for it – in terms of market share, or profits. Why?

In my estimation, Google’s strategy is failing because its tactics (promote new payment system) are misaligned with its real strategic goals (get access to super-valuable payments data). Its missteps are confusing by any measure, but make more sense when looked at this way.

Let’s look at four questions:

  1. What is Google trying to do?
  2. Why does Google care about payments?
  3. Why is it failing?
  4. How could it do better?
Part One

What is Google trying to do?

Google is trying to promote the adoption of Near-Field Communications (NFC), a technology that lets you use your mobile phone to pay for things by linking it to your credit card, bank, or a digital wallet. This is supported in Android and included on many millions of Android devices. Today, the technology has a 2% share of mobile payments, expected to reach 5% by 2016. [1]

However, instead of NFC, most people are using credit cards, cash, barter, etc., with no signs of quick change. People who do use mobile payments, are more likely to be shopping online, conducting bank transfers, etc., than they are to use NFC. Hence, this explanation…

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