Google Wallet Taking a Big Chunk out of Googles Pocket;
Back in 2011, Google announced its plans to revolutionize the way we buy things with its new Wallet service. The Google Wallet app promised to allow users to be able to buy things from retailers via their phone. The problem was, however, that far too many retailers supported the technology and that many users were concerned about the security of having your smartphone also be your debit card. The Wallet app has been downloaded 10 million times from the Play Store, but given the huge Android user base, that is not all that many people. Google Wallet has yet to find mainstream success, and according to a new report, the issue is costing Google quite a bit of money.
According to a new report from Bloomberg BusinessWeek, Google has dedicated hundreds of developers towards the service, but because of the lack of commercial success, the service is losing money like crazy. The report claims that Google has lost about $300 million so far, all from acquiring the digital payment startups to help develop the app.
The report says the goal for Google wasn’t necessarily to make money via fees with Wallet, but rather to collect data on consumer habits and target ads towards them. In fact, Google is forced to pay such high fees to credit card companies that it loses money on every transaction a user makes, according to Osama Bedier, who stepped down as head of Wallet on May 20th.
While Google wouldn’t comment on how much it had invested in Wallet, several sources say that the company has recently been cutting back on the amount of effort put forth to the service and has abandoned several other ideas designed for Wallet. The company is currently weighing whether or not to cancel the Wallet debit card it has planned. Bedier says this is a big change from how Wallet use to be run. Originally, he was given the ability to spend freely to develop Wallet.
A Google spokesperson says Google is committed to working further on Google Glass, however. “Payments are a big part of what people do every day, and we’re committed to making them easier for everyone,” says Nate Tyler, a Google spokesman.
One of the biggest issues surrounding Google Wallet is the lack of support from carriers. Sprint is the only major United States carrier that supports it. AT&T, T-Mobile, and Verizon have blocked the app from the play store on their devices and joined together to develop their own mobile payment solution, Isis.
Jason Gardner, the CEO of loyalty-card startup Marqeta, says Google has no intentions on shutting down Wallet do to the amount of data it has collected from the service. “The amount of data at the point of sale is so significant that they’re not going to throw in the towel,” he says.
Do you use Google Wallet? Do you ever see it catching on? Let us know down in the comments!
Source: Bloomberg Business Week