Google Wallet reinforces pay-by-phone plan with Softcard

Google has joined a bidding war for the mobile payment market by acquiring technology from Softcard and near-ubiquitous installation of Google Wallet on Android phones. 

Tech companies are betting your credit cards are going to move from your wallet to your phone rather soon. And they want a slice of that pie.

Later this year, Google’s mobile payment system, Google Wallet, will come pre-installed on Android phones sold by AT&T, Verizon Wireless, and T-Mobile. This news comes in light of Google acquiring the technology of Softcard, a mobile payment system developed by those three carriers. Between Apple Pay and Google Wallet, mobile pay will soon be readily available on most smart phones. But does that mean consumers are ready to transfer their funds to their phones?

“The Google Wallet app, including the tap and pay functionality, will come pre-installed on Android phones (running KitKat or higher) sold by these carriers in the US later this year,” Google says in a blog post announcing the move. “We’re also acquiring some exciting technology and intellectual property from Softcard to make Google Wallet better.”

Though Google has its hands in nearly everything digital these days, Google Wallet was previously faced with some serious competition in the Android world, namely Softcard.

Softcard was created through a partnership between AT&T, Verizon Wireless, and T-Mobile in 2010 (a year before Google Wallet was released), and uses near field communication (NFC) in smart phone to connect a customer’s mobile wallet to pay at more than 200,000 local and national merchants across the US. Softcard previously blocked Google Wallet payments, which created a big barrier for Wallet’s growth.

In the meantime, mobile payment technology, acquisitions, and investments have been major news over the past year. Apple Pay, Apple’s mobile payment system, was released alongside the iPhone 6 and 6 Plus in September, and comes preloaded on both phones. Samsung recently announced it acquired LoopPay, a mobile payment start-up.

Amid the growing fray, Google is now staking claim to its corner of the mobile pay world, namely Android. While it's not entirely clear which are the parts of Softcard that Google acquired, the company paid for technology and intellectual property. Current Softcard shoppers may still use the system, but Re/Code points out that it isn’t likely Softcard will stand on its own for long without its main innovation. Considering Google Wallet was already available for Sprint, Google now has a leg up on all Android mobile payment systems.

Now the question is: who is using mobile payment? Right now, not very many people.

Forrester projects mobile payments hit about $3.7 billion in 2014, and could go up to $6.8 billion in 2015. Sounds impressive, except the entire retail transaction market is $3 trillion. Even $6.8 billion is less than 1 percent of that market.

Currently, Apple is winning most of that small pool of mobile transaction money. Last month, Apple chief executive officer Tim Cook said that $2 of every $3 spent in mobile transactions in the US was through Apple Pay.

Mobile payments are no doubt a nascent market, but with Apple and Google going head to head, attention has definitely shifted from the wallet to its mobile counterpart.