Google plans to start testing a mobile-payment service at stores in New York and San Francisco within four months, letting shoppers use their phones to ring up purchases, Bloomberg reports.
The company is installing of thousands of cash-register systems from VeriFone Systems at merchant locations. The registers would accept payments from mobile phones equipped with near field communication capabilities.
Why Google wants to be in the business might not be so clear, but a look at other contenders will illustrate why mobile payments could be a strategic move, not just another mobile-enabled revenue stream.
It's probably quite obvious why Isis, the mobile payment system launched by AT&T, Verizon Wireless and T-Mobile USA, with Discover Networks and Barclays, makes sense: it represents a brand-new revenue stream for the mobile providers that builds on their key role in the mobile ecosystem.
For online payment providers, the attraction is the ability to extend a payment business from "online shopping" to the broader realm of payments that occur at retail locations. The latter represents vastly more volume than the former.
For Google, the angle might be different. Google is a company that makes its money from advertising. And virtually everybody thinks the mobile segment of the total advertising business is growing fast, and will continue to shift activity from stationary modes (PCs at desktops).
But some closely-related businesses, such as direct marketing, also are morphing from a largely offline mode to an online and mobile mode. So Google would rightly see direct marketing and promotion (coupons, the equivalent of direct mail and other direct marketing channels) as an important extension of its current focus on search and display advertising.
Also, the ability to target messages and offers to end users on their mobiles, in real time, where they are, is nearly universally seen as an area of huge growth. In the background, of course, most providers of any type of application, service or product would prefer to "own the customer relationship."
If Google is able to tie the final retail payments capability to its advertising, marketing services, location and information capabilities, it plausibly can position as a company that "owns" a customer and user relationship in a profoundly new way.
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