“Total Moontalk.” Google’s Fictional Challenge to Visa and MasterCard
Written by Nick HollandNick Holland has spent the last decade covering the intersection of the mobile and payments industries. He currently covers all things mobile-transaction related at Yankee Group.
If you believe the current media fervor, 2011 is the year of mobile payments. So were the years 2006 through 2010. This year, however, there appears to be more signal than noise in the form of announcements from PayPal, Visa, MasterCard, The Isis Consortium (Verizon Wireless, AT&T and T-Mobile) and, trumping all of these in the headlines, Google. However, Google’s likelihood of competing with existing payment networks is, in reality, about as likely as the Apple iShakeWeight.
Although last week’s news was mainly about Eric Schmidt’s shifting role at Google, that focus may have overshadowed some strategic insight he shared with the Harvard Business Review:
“We are at the point where, between the geolocation capability of the phone and the power of the phone’s browser platform, it is possible to deliver personalized information about where you are, what you could do there right now and so forth—and to deliver such a service at scale. But to realize that vision, Google needs to do some serious spade-work on three fronts: First, we must focus on developing the underlying fast networks (generally called LTE). Second, we must attend to the development of mobile money. Phones, as we know, are used as banks in many poorer parts of the world—and modern technology means that their use as financial tools can go much further than that. Third, we want to increase the availability of inexpensive smartphones in the poorest parts of the world.”
Ignoring points one and three—because these are going to happen anyway, irrespective of Google’s involvement—we will consider the second leg of the Google mobile stool—mobile money. Schmidt’s comment places phones as enablers of mobile financial services in developing markets. The media, however, has run with this concept as evidence that Google is looking to set itself up as a retail mobile payments network. Combine this comment with other announcements saying that Google has launched an NFC-enabled phone and is piloting an NFC retail initiative in Oregon and, clearly, Google is going to be the next MasterCard or PayPal.
As a professor of mine used to say to me: “Total. Moontalk.” Let me explain why.
Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code.
-Marc
