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Why Your Google Wallet Will Need a Plastic Backup


Big business loves mobile money, consumers not so much.

The convenience of "mobile money" was supposed to be a next big thing for the American consumer, but it doesn't look like that's happening any time soon.

Google Inc. (NASDAQ:GOOG) this week announced it is adding a debit card made of genuine plastic to its virtual payments system, Google Wallet, in order to make it a little more useful to consumers than it is now.

It is an admission that mobile money isn't as compelling to the American consumer as it is to big business, at least for the present. Or, at the very least, that the intense competition among players has effectively prevented any one of them -- including Google -- from making a success of it.

In short, the devil is in the details, and they are complicated enough to make anyone but the most determined early adopter conclude that swiping a credit card isn't that much trouble.

It's easy enough to explain mobile money in broad strokes: Download an app. Tap your smartphone on a reader device at the cash register. You're done. A safer, smarter way to shop.

It's also an extremely lucrative way for you to shop, from the viewpoint of the businesses that are trying to get into it. It promises a steady stream of transaction fees, plus a flood of useful and saleable data on your shopping habits.

Banks, technology companies, telecoms, and retailers all want in on mobile money. So do a number of smaller start-ups. But based on the slow adoption of Google Wallet, it looks like each of those competitors has managed only to stifle progress by any of the others.

That's one big reason why Google Wallet is a dud, at least to date, despite the company's expenditure of an estimated $300 million in real money on its development, according to a Bloomberg Businessweek report.

Here's why:

To use Google Wallet, you just download an app, and away you go, tapping and paying. But there are a lot of "buts." You have to use a Google Android phone, version 2.3 or later, because they come equipped with NFC, or near-field communication, to enable the tap-and-pay function.

There's an Apple (NASDAQ:AAPL) iPhone app for it in the iTunes store, if you have an iPhone 6, but you still can't tap and pay with it. Apple doesn't support NFC, since the company has its own mobile money aspirations, the Passbook feature introduced with iOS 6.

Moreover, you have to be a customer of Sprint (NYSE:S), or one or two smaller competitors, including Virgin Mobile and US Cellular. You can't use it if your provider is AT&T (NYSE:T), T-Mobile (NYSE:TMUS), or Verizon Wireless (NYSE:VZ), because those companies have formed a consortium behind their own mobile money product, called Isis.

If you get past all of the above hurdles, you can have Google Wallet. It can be used at an estimated 300,000 retail locations, but these do not include Wal-Mart (NYSE:WMT) or Target (NYSE:TGT) stores, because those retailers have their own mobile money aspirations, too.

With all of these barriers in the way, Google has begun to emphasize another aspect of Google Wallet, which is the ability to send money to a friend within the US via email. That's actually the primary function of the iOS app, since it doesn't enable tap-and-pay at stores.

Google clearly is adding a debit card to its Google Wallet product in order to make it more useful, or at least more intelligible. The debit card allows users to withdraw cash from a Google Wallet account balance at an ATM, and complete transactions at any US store that accepts MasterCard (NYSE:MA).

So, now the question is why people would want to use a Google debit card instead of the bank debit cards that they already have in their wallets. Their real wallets, that is.

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