Can Apple Succeed in Payments Where Google Failed?


Launched in 2011 as a unified mobile payment system, Google's ambitious Google Wallet service has failed to take off. Part of the search giant's push was to embrace near-field communications, or NFC, which was hailed as the next revolution in mobile payment technology. NFC has been around for ages, but the prospect of using it for mobile payments renewed interest in the short-range communication protocol.

Bloomberg Businessweek describes how much of a money pit Google Wallet has become. Over the years, Big G has plunged a vast amount of resources into developing Wallet, including $300 million in small acquisitions. For instance, Google purchased Zetawire in 2010 and TxVia a year ago, both of which specialized in payment technology.

Since Google isn't looking to monetize Wallet directly, characteristically going after user data instead, Wallet operates in the red since Google pays out hefty fees to credit card companies. Heading into Google I/O, there were even rumors that Google was considering launching a Wallet credit card.

Still, payments are too important to mobile computing to give up on. Google even expanded and unified Wallet last month, shuttering the older Google Checkout system and rolling it into Wallet. The company also added new features, such as the ability to send money through its popular Gmail service.

Carriers also don't support Wallet, since it competes directly with their own Isis network. Verizon blocked Google Wallet in 2011 from the Galaxy Nexus, and Sprint Nextel remains the only carrier to support the payment service.

Wallet fetches an average rating of only 3.2 stars on Google Play, and users mostly either love it (five stars) or hate it (one star).

Google Wallet user ratings. Source: Google Play.

By just about any measure, Google Wallet hasn't moved the needle in any meaningful way. Will Apple fare any better?

The Mac maker is widely expected to unveil some type of mobile-payments solution in the near future. Apple now has more than 500 million active iTunes accounts with payment information just a tap away, and it could easily leverage immediate network effects for a payment service.

We also know that Apple purchased fingerprint-sensor specialist AuthenTec last year, which promises to add a layer of biometric security that's more robust than simple PINs and passwords. Apple has downplayed the use of NFC, noting that the infrastructure simply isn't there yet and merchants won't invest to upgrade terminals until consumers adopt it -- a classic chicken-and-egg dilemma.

Apple could unveil the service as soon as Monday, when the company's Worldwide Developer Conference begins. Whenever Apple is late to market, it's usually because it's spending the extra time to get things right and with an innovative or unique approach.

Will Apple get payments right? Or will it become the next Maps or Siri?

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged among the five kings of tech. Click here to keep reading.

The article Can Apple Succeed in Payments Where Google Failed? originally appeared on

Fool contributor Evan Niu, CFA, owns shares of Apple and Verizon Communications. The Motley Fool recommends and owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.