Android Pay, which begins rolling out today, has not killed Google Wallet as many assumed it would.
Instead, Google Wallet today made public that it has made another pivot, this time into a peer-to-peer payments service like PayPal or Square Cash. Several years ago, Google Wallet was the next big thing in mobile payments, but its functionality and prestige suffered from a series of blows that led to the introduction of a prepaid debit card, which still survives.
Essentially, the old Google Wallet split into Android Pay, the NFC payment vehicle, and this new, slimmer service. That old Google Wallet app will reportedly be renamed Android Pay soon. Users can send money from a card or bank account or their Google Wallet balance to another users via the app, website, or Gmail. This last service caused a huge stir in the spring of 2013. Gmail users needed to get Google Wallet accounts to use the service, though it’s not clear how successful that drive was. (We are betting it wasn’t.)
Why keep Google Wallet alive as a brand rather than fold it into Android Pay? The term “Wallet” hardly seems applicable anymore. Twitter user Frank Young, a former Googler, notes that the option to move funds from Google Wallet to a debit card has expanded its functionality in a significant way:
New #GoogleWallet option to cash out to a debit card. This 1 change shifts GOOG’s P2P strategy from product to platform.
— Frank T. Young (@FrankTYoung) September 10, 2015
That’s undoubtedly Google’s hope.
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Philip, let me expand. The old Google Wallet was a bit of a mess. You could send / receive money, tap & pay, get offers, store rewards / gift cards, see transactions and even get shipping details for items you had tracked in gmail. The registration process for the money movement activities required the user to go through KYC steps (last 4 SSN, date of birth etc.). These KYC steps killed conversions. The result was a bloated mess of a product.
Now we have the 4th version of Google Wallet stripped down to the bare essential function of money movement. Users can avoid the KYC step simply by using a Debit card. If the user has a debit card, they’ve already gone through KYC with the bank that issued the card.
So a sender with a debit card on one end and a receiver on the other side with a debit card can easily send funds to each other without requiring KYC.
So what?
Think about the services you can layer on top of a sender / receiver both of whom have a debit card? Why call them sender and receiver and not buyer and seller? Sellers don’t need a merchant account – they just need a debit card and an email address. Sending money through gMail, sending money to content creators on Youttube, sending money from one Android user to another. Debit cards are global, with this one change, Google has a money movement service that can achieve global scale very quickly. The former product would have taken a decade to scale globally because of the regulatory overhang of managing funds vs now they simply use the network to register a credit and debit – google doesn’t need to store the funds.
This is a major pivot – if the platform vision is executed this could be highly innovative. Will be fun to watch.