Fintech

Google's payments strategy is taking another twist as it battles Apple

The smartphone giants are trying to lock in mobile users with a digitized version of the physical wallet for drivers’ licenses, tickets and credit cards.

Google Wallet

The new Google Wallet will handle all credit and payment cards as well as nonpayment items you would have in your physical wallet, such as driver’s licenses or state IDs.

Image: Google

Google is launching a new Google Wallet app on Android and Wear OS, looking to streamline its payments products and lock users into Android more tightly.

The move is part of a broader effort by tech giants Google and Apple to bind consumers more closely into their mobile devices by making the digital wallet as essential to consumers’ everyday lives as the physical wallet.

That means making the digital wallet not just a way to pay at the point of sale with a credit card but also use tickets, IDs and other essential items.

The new Google Wallet, announced Wednesday at Google I/O and available sometime in early summer, will handle all credit and payment cards as well as nonpayment items you would have in your physical wallet, such as driver’s licenses or state IDs, library cards, concert tickets, boarding passes, vaccine cards and loyalty cards. Google is also working on supporting other pass types, like hotel keys and office badges.

Google already has the Google Pay app, but that will be changing. In 39 of the 42 markets where Google Pay stores payments cards and tickets and offers tap-to-pay functionality, Google Pay will become Google Wallet. These countries include Australia, Brazil, France, Canada, Germany, the U.K. and Taiwan.

In the U.S. and Singapore, where Google Pay is a payments app that people can use for paying friends, finding deals and managing their money, Google is launching a separate Google Wallet app. In India, where Google Pay supports the popular UPI payments system, people will keep the same Google Pay app.

“Wallet is a container for all your payments and nonpayment use cases. And I think that's a really important distinction because many of the wallet use cases used to be in Google Pay—now we're pulling them out into Google Wallet,” said Arnold Goldberg, VP and general manager of Payments and NBU at Google.

Creating a separate Google Wallet app could bring more clarity for developers and for consumers with the analogy of a physical wallet.

Google Pay and Google’s payment products generally have gone through a number of iterations. Google Pay consolidated other payment services, including one called Android Pay, and a prior version of Google Wallet launched in 2011. Google Pay was most recently set to become the anchor of a consumer banking product with checking and debit accounts through partner banks such as Citigroup, but Google dropped that plan last year.

Google Pay will now be for peer-to-peer payments, deals and managing your money, Goldberg said.

Google Wallet will be available for developers who want to build on it, for things like barcodes or QR codes used for items such as library cards or event tickets. Google is working directly with states and local governments to do more complex integrations such as driver’s licenses.

Google is also working on ways that the Wallet can be tied into other Google services. For example, if a transit card is added to the Wallet, the card and its balance will show up in Google Maps when searching for directions. And users can then tap to add to the balance. This integration will be live with more than 100 transit agencies at launch, Google said.

Granular privacy controls will ensure that users can keep information such as vaccine cards private across other Google services, Goldberg said.

Apple, for its part, has already pushed deeply into building a digital version of the physical wallet. It has added the ability for consumers to add a digital driver’s license in Arizona, which the TSA will accept at certain security checkpoints. Apple is working on adding more states soon.

Regulators have taken an interest in how mobile wallets are used by tech giants. The European Commission said last week that Apple is violating its antitrust rules by limiting competitors’ mobile wallets.

Google is also announcing Wednesday a new virtual card feature for Chrome. Chrome can already store consumers’ credit cards to autofill them for payments. With the new feature, users can create a virtual card, which disguises the actual card number to increase security. The virtual card will also auto-generate a CVV code, so users will not have to pull out a physical card to enter it. This will be available this summer in the U.S. for Visa, American Express and Capital One cards with Mastercard coming later this year.

It’s not exactly new: Citi introduced a similar service for virtual cards called Virtual Account Numbers in 2002 — that’s not a typo — and Apple Pay uses a similar tokenization technique to disguise credit card numbers. But Google is focusing on the browser and has the advantage of a large installed base of Chrome users. The service is launching in the U.S. first, and only on Chrome desktop and Android, not on Chrome on Apple iOS devices.
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