Google (NASDAQ:GOOG) is reportedly in talks with mobile payments company Softcard in what could be an attempt to build out its mobile wallet capabilities to better challenge Apple Pay (NASDAQ:AAPL).
2014 was a big year for mobile payments as Apple's mobile platform finally seemed to open the door to mainstream acceptance. According to a recent Digi-Capital report, investments in mobile commerce grew to $4.2 billion from 2013 to 2014, largely from investors like Uber and Pinterest.
But while the success of Apple Pay may have given rival platforms like Google Wallet and PayPal (NASDAQ:EBAY) a boost, they still have a lot of ground to make up. And bringing Softcard on board may not be enough for Google.
Brittany Salcedo, night manager at Canyon Market in Springdale, Utah, told The Wall Street Journal that the supermarket installed Apple Pay-ready wireless readers just a few weeks ago, and already nearly a third of shoppers are taking advantage of the service. Those machines are also equipped to accept Softcard, but Salcedo said that around five times as many customers use Apple Pay as do Softcard.
That's indicative of the struggles Softcard has been dealing with lately, resulting in a reported price tag of under $100 million despite the investment of hundreds of thousands of dollars in the platform by AT&T, Verizon and T-Mobile, the three carriers who started the company as Isis back in 2010. Softcard also laid off around 60 employees earlier this month and has been scrambling to consolidate.
Ultimately, the benefits to Google from a Softcard acquisition seem pretty limited, at least when it comes to the payment technology itself. Softcard originally locked users out from Google Wallet, but Google bypassed the lockout with Android 4.4. Android 5.0 will allow even more people to use the platform, offering little in the way of growth potential by partnering with Softcard. Both Softcard and Google Wallet also rely on PIN codes to confirm purchases, much more inconvenient than the fingerprint scanning Apple Pay implements. Not to mention Softcard is reportedly bleeding $15 million per month.
Those troubles have led some to believe Google's interest in Softcard may center on some 120 patents and applications for patents the company holds. It may also be possible to maintain the platform's relationships with the three major wireless carriers and the retail channels they can offer, surely a consideration for a company as digital-focused as Google.
Amazon pulls plug on Wallet
Samsung in negotiations to launch its own mobile payment system
Apple Pay's following grows heading into holiday season
Softcard partners with McDonalds, demonstrates mobile wallet's impact
Mobile Wallet Isis rebrands as Softcard