Google has acquired Softcard to increase its share in the mobile payment market, as it plans to compete with rival services from Apple and Samsung
Mobile payments landscape holds a lot of promise in terms of transaction value. According to research conducted by Gartner, mobile payment transactions were to surpass $235 billion worldwide, and this was only in 2013.
Launched in October last year, Apple Inc.’s (NASDAQ:AAPL) innovative mobile payment platform Apple Pay was an answer to Google Inc’s (NASDAQ:GOOG) Google Wallet, which was launched in May 2011, and Softcard, which was a joint venture between AT&T, Inc. (NYSE:T), T-Mobile US Inc (NYSE:TMUS), and Verizon Communications Inc (NYSE:VZ). Google Wallet, however, has been struggling in the mobile payments arena, while Apple Pay has been gaining popularity fast. Samsung Electronics Co. Ltd (OTCMKTS:SSNLF) also made a serious attempt to enter the mobile payment market when it recently acquired LoopPay.
Google made its own move yesterday when it agreed to acquire Softcard in order to boost its Google Wallet service. In return, the US carriers would install the Google Wallet app by default on their smartphones running Android KitKat or higher. The Softcard technology relies on NFC (near-field communication), which Google Wallet and Apple Pay have already been using. Integrating Softcard with Google Wallet will not be a major hurdle. It will be the adoption by retailers that will determine how successful Google’s move is, as they are slow to upgrade to NFC-enabled terminals.
Samsung’s acquisition of LoopPay, on the other hand, provides a significant advantage to the electronics giant in the mobile payment market. It does not employ NFC technology but rather magnetic strip readers which are common in stores.
Google confirmed its purchase on its Google Commerce blog: “We’re also acquiring some exciting technology and intellectual property from Softcard to make Google Wallet better.”
Existing Softcard users can continue to use their app. The company will reveal further information regarding the purchase in the coming weeks on its official blog.