Google Wallet is making progress, but it’s not a Venmo killer
Last month, Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) announcement Gmail users could now send and receive money on Android devices through its Google Wallet platform. The service was available through Gmail since 2013 but, until last month, it was not available on mobile devices.
To use the service, just compose a new email in the Gmail app on any Android mobile device. Once a new email is opened, users simply choose the “Send Money” or “Request Money” options under the attachment icon. Once a debit card is linked and the amount of money is selected, the funds can then be sent to anyone with an email address or phone number. The recipient does not need to be an existing Google Wallet user or have a Gmail account and is free to all users. The service is currently only available in the US and UK.
This feature is Alphabet’s latest attempt to engage its over 1 billion active Gmail users. The Android operating system, which runs on most smartphones and tablets, had 1.4 billion active users as of September 2015. The overlap between the two is almost certain to run into the hundreds of millions, making this news feature a path that Alphabet could pursue to deepen its relationship with its huge account holder base.
Google Wallet’s uninspiring past
While Alphabet has never released official figures for how many active users are on Google Wallet, you don’t have to dig too deep to find that it’s not widely used; a situation almost certainly of Alphabet’s own making. From the start, the platform suffered from a lack of focus and strategy from its parent company. A perfect example of this neglect, this very feature of using Gmail to send money to other people was first available to desktop users in 2013. Yet it took Google four more years. to integrate it into the Gmail app on mobile devices.
Originally, NFC (Near Field Communication) technology was to be used with Google Wallet so that the app could be used to make point-of-sale (POS) purchases. However, this capability was discontinued in September 2015. In 2016, Google discontinued the Google Wallet card, a physical debit card directly linked to its Google Wallet account. These decisions effectively ended all the ways in which customers could use their Google Wallet accounts to complete point-of-sale transactions at physical outlets, although there are some workarounds, such as associating with ” a Google Wallet account at Android Pay, a separate payment app available only to Android users. .
The uneven present of Google Wallet
The constant interference with the capabilities of Google Wallet has certainly contributed to its lag in popularity. It is now essentially a P2P payment platform that has to compete with the likes of PayPal Holdings Inc‘s (NASDAQ: PYPL) Venmo and the all-new Zelle, a P2P app provided by many of the country’s biggest banks to their customers.
Google Wallet will have to overcome many obstacles if it is to gain significant market share. In Accent’s 2016 North American Consumer Digital Payments Survey, consumers have indicated that they trust traditional card providers, alternative payment providers (e.g. PayPal) and established retail banks as potential mobile payment providers compared to large tech companies.
And the competition doesn’t stop there. In Q4 2016, PayPal’s Venmo app, a hit by millennials, facilitated a payment volume of $ 5.6 billion, a dramatic increase of 126% year over year! In December 2016, Venmo crossed the $ 2 billion mark in total payment volume in a single month for the first time in its history. It was just earlier in the year when he first crossed the billion dollar threshold in just one month!
Zelle is a P2P payment service operated by Early Warning which is owned by some of the largest financial institutions in the country, including Bank of America, BB&T, A capital letter, JPMorgan Chase, PNC Financial, and Wells fargo. As with the new Google Wallet service, account holders at these banks will be able to send and receive funds using just a person’s email address or phone number. Many future Zelle users will be able to access the service through their existing mobile banking apps, meaning that no additional apps will need to be downloaded to their smartphones.
The uncertain future of Google Wallet
Will this latest feature spark increased user interest and engagement for Google Wallet? While it’s impossible to say, I think it’s highly unlikely, although I certainly see uses for it. Earlier this spring, I was exchanging emails with my sister about the upcoming summer vacation our families were taking together. She mentioned that she would book a large cabin in the mountains and that I could reimburse her later. It would have been nice to just respond by email with the attached payment as an attachment.
While I know it wouldn’t have taken a lot of effort to sign up for the service, it would still have taken more effort than using PayPal, a service my sister and I use regularly. And, while it is possible to send money through Gmail to people who are not yet users of the service or who do not have a Gmail address, I didn’t want to make my sister go through the aggravation. to have to link his debit card to the email to collect the money.
The uphill battle that Google Wallet faces is one that many platforms are familiar with – once people get comfortable with a certain system, it’s hard to get them to change.
PayPal’s main platform currently has 200 million active accounts and is growing steadily at double-digit percentages every year. As noted above, Venmo is currently experiencing triple-digit year-over-year growth. Considering the massive lead these two PayPal platforms enjoy, it’s hard to see Google Wallet close the gap without huge marketing pressure and a lot of attention from its parent company. With Alphabet’s track record with Google Wallet, this is not something to rely on.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.