Today, a report from Businessweek showed the cracks in one of Google’s most spirited and cutting-edge products. Google Wallet, it seems, is a “money pit.” The team is now forced to make tough decisions about how to move forward with the product, potentially scrapping projects designed to encourage digital wallet adoption.
It’s been a rough few years for the digital wallet space in general. Smaller companies like Dwolla and LevelUp have a hard time reaching out to educate their audience and expand their consumer base, according to a study by ComScore. PayPal, with the most name recognition out of all, has investors unsure of success in the onsite payments business according to Mercury News. Even buzzy payments provider Square, boasting of processing mobile transactions upwards of $8 billion per year, has only 3 million Square Wallet users as of last year, according to CNET. But perhaps no company has felt the squeeze quite like Google.
The search giant has already sunk $300 million into acquisitions to supercharge the technology and edge ahead of competitors, but the reaction to the service has been lukewarm at best. Wallet has been downloaded from Google Play fewer than 10 million times in the last two years, which means it is dwarfed by an order of magnitude by Google’s other offerings — even the recently released Hangouts app.
Even those who download digital wallet apps like Google Wallet use them sparingly: Only $500 million in transactions went through U.S. stores and services via mobile payments in 2012, and roughly $12.8 billion worldwide. A lot of the trouble with digital wallets has to do with inconsistency among retailers, and the lack of widespread information about when and where the public can even use an app like Google Wallet. Until most stores accept mobile payments as quickly and simply as handing over cash or swiping plastic, there’s not going to be enough volume to push Google Wallet in the black.
The other significant barrier that Google Wallet faces is a lack of cooperation from the carriers. While a decent amount of Android, Blackberry and Windows Phones have NFC enabled in their hardware, only Sprint allows Google Wallet on devices. Having to battle with other carriers, on top of other wallet companies and Apple, with its own forays into Passbook, will further stretch Google Wallet as it struggles to find a steady audience that has access to the product.
Like many of its now-shuttered projects, Google Wallet may have entered the mobile-payments market too early and too strong to make a real play at domination. Forrester Research estimates the space will hit $90 billion by 2017, but that’s a long time to wait and see if a major investment will turn around — even, perhaps, for Google.