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Google Mobile Payments: Don’t Get Too Excited

May 26, 2011, 4:07 a.m.
ABI Research

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Don’t expect today’s Mobile Payments service launch by Google to amount to much momentum for mobile payments this year. The primary problem is the lack of handsets equipped with NFC chips in the hands of consumers. At this point, the only device in the U.S. with such hardware is Google’s Nexus phone sold through Sprint, and frankly, there aren’t that many of them out there.

I would not expect Google to attempt the NFC sticker route either – this clunky solution in which consumers have to place an NFC chip embedded in a sticker on their phones.

No, today’s announcement is more about testing the waters to see if Google’s value proposition around mobile payments will work. They are more likely interested in how mobile payments and NFC can trigger advertising opportunities for Google. And in that case, lots of players are interested in seeing what happens. Should advertising and marketing tied to mobile payments NFC prove to agree with consumers, then the revenue pie grows infinitely larger for not only the advertisers, but for Google, wireless carriers, payment players like Visa and MasterCard, payment gateways like First Data and merchants.

This is setting things up for later. Google knows for NFC mobile payments to gain momentum there needs to be a significant percentage of NFC –equipped handsets in the marketplace. The same thing applies to merchant POS systems – very few can accept NFC mobile payments today.