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Apple’s impressive run with Apple Pay over the past few months appears to have galvanized Google’s efforts to grab some mind and market share of its own in the rapidly emerging mobile payment services space.
The company on Feb. 23 said it has acquired technology and intellectual property from Softcard, a mobile payments venture established in 2010 by Verizon Wireless, AT&T Mobility and T-Mobile USA.
Softcard’s near-field communication (NFC) payment technology will power future versions of Google’s Wallet app for mobile payments, the two companies said. Under the technology acquisition arrangement, Verizon, AT&T and T-Mobile will preinstall Wallet on smartphones running KitKat or higher versions of Android, starting later this year.
It’s unclear whether Softcard, once known as Isis, will continue as a stand-alone entity or fold up entirely once the technology acquisition is complete. The company earlier this year laid off about 60 employees as part of an effort to pare down costs.
Earlier, TechCrunch had speculated that Google would likely have to pay less than $100 million to acquire Softcard.
“For now, Softcard customers can continue to tap and pay with the app. We will share more information with customers and partners in the coming weeks,” the company said in its announcement Monday.
Ariel Bardin, Google’s vice president of payments, said Softcard’s technology would allow Google to extend its tap-and-pay mobile payments technology to a much broader set of smartphone users.
Since Google launched Wallet in 2011, the company has received positive feedback on its tap-and-pay feature and has continued to invest in improving the security and usability of the technology, Bardin said. “A big part of this is working with other innovators in the industry to help provide a seamless experience across a wide range of phones and stores,” Bardin noted.
Google’s purchase of Softcard’s technology is not entirely surprising. Rumors of the company’s interest in Softcard have been swirling for several months. A few weeks ago, when news emerged of a reported Google plan to launch a new mobile payment platform called Plaso, some analysts speculated that Softcard’s technology could play a central role in the effort.
Though expected, Google’s latest moves appear to be a response to Apple’s big gains in the mobile payment space in the relatively short time that Apple Pay has been around. With its 2011 launch of Wallet, Google has been in the mobile payment space considerably longer than Apple, but has failed to make a big impression so far.
Market research firm Investment Technology Group (ITG) pegged Apple Pay’s share of overall digital payment dollars at 1 percent in December barely two months after its launch, compared to Google’s 4 percent share more than three years after Wallet became available.
In this context, Google’s and Softcard’s agreement is a big deal, said Charles King, principal analyst at Pund-IT. “It opens Google Wallet to platforms that had previously blocked it, like Verizon for example,” he said. The technology acquisition effectively places Google in partnership with major backers of Softcard, which include companies like Visa, MasterCard, American Express, Barclays and Discover, King said.
“That’s a powerful strategy for Google,” King wrote in an email. “It is substantially different than Apple’s which has depended on cementing partnerships with popular retailers like Starbucks,” King noted.
Though the Softcard arrangement doesn’t seem to prevent credit card firms from cutting deals with Apple, the technology acquisition should effectively place the company ahead of Apple in the queue, he said.