Summary:

In yet another sign of the slow progress of mobile payments despite strong interest, Google is rethinking its approach to Google Wallet and may consider sharing revenue with wireless carriers, according to a new report. Otherwise, carriers may push their own payments tech instead.

Google Wallet Cash Register

Google Wallet Cash RegisterIn yet another sign of the slow progress of mobile payments despite strong interest, Google is rethinking its approach to Google Wallet and may consider sharing revenue with wireless carriers, according to a new report.

Bloomberg reported Wednesday that two key Google Wallet team members — Jonathan Wall, who developed the software, and Marc Freed-Finnegan — have left the company amid slow adoption of Google’s vision for mobile payments. But far more interesting is the notion that Google may be forced to cave to pressure from carriers by sharing a percentage of its cut of Google Wallet transactions with Verizon and AT&T, who are working on their own mobile payments system.

Building a mobile payments system is a huge chicken-or-the-egg problem. Retailers aren’t crazy about investing in new payment hardware unless they’re pretty sure people will want to pay using that new gear. Consumers aren’t always sure why they should pay using their phones when their plastic credit cards work just fine. Wireless carriers aren’t keen on letting anything so potentially lucrative operate over their airwaves without their participation. And credit-card companies are also determined to be part of the evolution of payments.

Yet the general idea makes sense for many reasons. Google has struggled to get Google Wallet off the ground, mostly due to the fact that only two phones it’s available on are on Sprint’s network. Verizon refused to implement Google Wallet on the Google-designed Samsung Galaxy Nexus over “security concerns,” which was really just code for “we want a cut or we want to use our payments product.”

With Verizon and AT&T set to launch their own Isis technology later this year, they would have been poised to cut Google Wallet completely out of the payments market: it would be hard to compete with the officially sanctioned mobile payments technology on the two largest wireless networks in the U.S. A revenue-sharing deal might allow Google to at least compete for space on Verizon and AT&T handsets with Google Wallet.

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