Google Wallet - A Glimpse into the future of mobile payments

TABLE OF CONTENTS

EXECUTIVE SUMMARY

INTRODUCTION

BUSINESS MODEL
Business Approach
Stakeholders
Target Customers
Buyers of Google Wallet
Revenue Sources

SWOT ANALYSIS
Strengths
Weakness
Opportunities
Threats

STRATEGIC ANALYSIS: SWOT PORTER’S FIVE FORCE ANALYSIS
Existing Rivalry
Bargaining Power of Buyers
Bargaining Power of Suppliers
Barriers to Entry
Threat of Substitutes

KEY POINTS: PORTER’S ANALYSIS STRATEGY CANVAS
Convenience of making online and offline transactions
Convenience of mobility
Personalization and Location
Security

RECOMMENDATIONS

EXECUTIVE SUMMARY

Over the past few thousand years of evolution, the way we pay has changed shapes and materials. It has gone from gold to coins, paper money to plastic cards and now with Google’s venture into the mobile payment industry, we are at the threshold of the next big shift. Google Wallet is a mobile payment Android app that transforms a phone into a wallet. This app utilizes the Near Field Communication (NFC) technology that allows its users to pay for purchased items and redeem offers. At this initial stage of business, therearemany features andfactorsthat Google needs to change in order to bring about the mass adoption of this service. As the Business Technology Analysts atGoogle, we-KritikaMaheshwari, Malvika Sarafand Rohan Handa aim at addressing the hurdles for this technology and the methods to bring it to fruition. In the process we evaluate Google’s profit motivation and the bigger strategy behind this service. First, we explain the business approach which describes the importance of the adopted business model. We use Porter’s Five Force analysis to determine the competitive intensity in the market followed by SWOT analysis to give recommendations that will help in the mass adoption. Finally, we focus our paper on formulating a strategy canvas in order to study the existing payment methods in comparison to our service. The paper concludes with recommendations to Google for promoting wide customer acceptance.

INTRODUCTION

Google in the last decade has emerged as the epitome of what technology and innovation can achieve. Through Google Wallet, we have proven our inimitable creativity once again by linking the payment industry with the NFC technology. Our vision is to enable all phones with this application, bringing simplicity and efficiency to the end users through single tap technology. It will make online and offline payments an experience rather than a chore for both, customers and merchants. This will eventually eliminate the use of credit cards and revolutionize the mobile payment industry. The app is the symbol for information personalization and we continuously aim at making itmore secure. GoogleWallet just like Google search engine has helped to bring new coherence and focus to the otherwise Darwinian and chaotic landscape of mobile payments.

BUSINESS MODEL

BUSINESS APPROACH

The Collaborative model

We choose this model based on our ultimate goal of a fuller market adoption. Since, this model emphasizes on the need for us to manage and work with all the parties in the mobile payment ecosystem; it facilitates an efficient, holistic environment, providing oversight, business rules and standards for all the service providers.

By collaborating with large and reputed banks like Citibank, trusted credit card companies like MasterCard, large telecommunication companies like Sprint and quality handset manufacturers like Samsung, we will be able to leverage on our partner’s wide customer base in the US market and promote our mobile wallet through them. This will not only help us establish our presence, but also give us a brand recognition in this emerging market.

The figure on the next page helps explain the position of the collaborative model in comparison to other business models.

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Figure 1: Collaborative Business Model

STAKEHOLDERS

The major stakeholders for this venture are the following:

Financial institutions (Issuing banks) - Citibank

Mobile operators -Sprint

Technology service providers – TNS and Neustar

Point of sale systems – First Data

Mobile handset manufacturers – Samsung

Merchants - American Eagle Outfitters, Jamba Juice, The Container Store, Foot Locker, Guess, Macy’s, Office Max and Toys“R”Us.

Consumers

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Figure 2: Key players in the mobile payment service value chain

TARGET CUSTOMERS

Google Wallet aims at targeting the existing bank account or credit card holders. However, the research conducted by the US government in 2009 revealed that 18% of the US households do not have a bank account. There is a clear line of distinction under the affordability and eligibility criteria. For instance, students and low-income customers do not posses bank account or credit card information since they do not meet minimum requirements for it. This reflects the inability of the current payment industry to serve a significant group of consumers.

The following figure illustrates the requirements by customers from a mobile-payment device.

Google wallet has been able to identify the existing opportunity in the current market and decided to leverage on this potential group of customers. We mainly target the smart phone user industry and those customers who have an existing bank or credit card account.

BUYERS OF GOOGLE WALLET

Value to customers

Easy to use: Consumers can pay, redeem offers and earn loyalty points

Facilitated by retailers, taxis, drug store, malls as well as in some select few train stations

Free of cost, it does not charge the consumers whether they shop in-store or online

Offers discounts which are exclusive to Google Wallet

Faster check out

PIN Verification ensuring secure transactions

Google Prepaid account which can be recharged with any credit card

Value to Merchants

No additional charges for transactions via Google Wallet

Endorsement of their coupons and offers via Google Wallet; driving more in store traffic

Better loyalty conversion rates

The figure on the following page illustrates the important factors the buyers would evaluate the mobile payment on.

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Figure 3: Pie chart depicting important factors while making mobile payments

REVENUE SOURCES

Google Wallet produces no revenue directly from payments; the revenue from payments remains intact for the banks and merchants. The wallet is simply a replacement for credit cards generating revenues in the following ways:

Google Advertisements

Revenues earned via endorsements made by merchants.

Consumers

·Revenues earned via data mining and Google Offers.

SWOT ANALYSIS

In this section of the report, we will be conducting SWOT analysis on Google Wallet to better understand its capabilities for mass adoption. Based on this analysis, we recommend leveraging on Google Wallet’s strengths and opportunities in the market and also address its weakness and related threats. The following figure outlines the key points under each of the category.

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Figure 4: Google Wallet's SWOT Analysis

STRENGTHS

Secure transactions.

Even though, it ties credit card information with the mobile phone, Google Wallet is much safer than credit cards. If the phone’s screen is off, the transmitter chip cannot be powered and stores no data.

If the phone is not used for 30 minutes, the app automatically logs out the user and the four digit pin needs to be re-entered.

Ease of Use

Google Wallet is an invention which is simple and stripped-down, attracting those who may be averse at the thought of obsolescing their credit cards.

Customers

A user needs to type in the required bank account information and start using it instantly after the addition of funds.

Google Wallet lets its users create Google Prepaid Card (GPC), a virtual card letting users top up with any of their existing credit cards.

Also, they do not have to pay any fees to top up their GPC.

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