Google Inc (NASDAQ:GOOG) has agreed on a deal with major wireless providers to purchase the NFC-enabled digital wallet company, Softcard. Recently, it was reported that Google was looking to significantly revamp Google Wallet to compete with Apple Inc.’s (NASDAQ:AAPL) contactless mobile payment solution, Apple Pay, which continues to gain momentum with every passing week. Samsung Electronics (OTCMKTS:SSNLF) also recently announced its acquisition of LoopPay, as the electronics giant looks to build its technology into future flagship devices.
Softcard announced the deal on its official blog: “Softcard has completed a deal with Google to bring together leading technologies to advance mobile wallets." As part of the deal, T-Mobile US Inc. (NYSE:TMUS), Verizon Communications Inc (NYSE:VZ), and AT&T, Inc. (NYSE:T) will pre-install Google Wallet on all of their Android devices in the US, starting from later this year. The deal will greatly benefit Google Wallet’s sporadic adoption.
The Wall Street Journal had previously reported that Google would be buying Softcard. Now, Google has confirmed the purchase of the mobile wallet technology on the Google Commerce Blog. “Under this relationship, the Google Wallet app, including the tap and pay functionality, will come pre-installed on Android phones (running KitKat or higher) sold by these carriers in the US later this year."
The official post went on to reveal that the company is also “acquiring some exciting technology and intellectual property from Softcard to make Google Wallet better."
The tech giant is likely to reveal further details and updates about the acquisition at the upcoming Google I/O developer conference in May.
Softcard has already partnered with the Barclaycard network and the Discover network in the US. The company was originally established in 2010 as part of a joint venture agreement between AT&T, T-Mobile, and Verizon to provide NFC-based technologies similar to Apple’s own contactless payment system. It is unclear whether Sprint Corporation (NYSE:S) will become part of the system or not, after Google’s acquisition, having been left out of the Softcard system at the time of its inception.
Softcard’s official blog notified customers that they can still “continue to tap and pay with the app. We will share more information with customers and partners in the coming weeks.” Furthermore, reports from Recode suggest that the likelihood of Softcard team members or employees joining Google is very slim.
While Google Wallet has been around for much longer than Apple Pay, it has struggled to make a significant mark on the mobile payments market and currently holds only 4% market share, as reported by ITG in December 2014. In comparison, Apple Pay, which was only made available to consumers in November last year, had managed to grab a market share of 1.7% by December.
One of the reasons for Google Wallet’s limited adoption was the fact that wireless providers had blocked the technology from working at brick-and-mortar stores as a tap-and-pay payment solution. As the Android smartphone market continues to be spread over various manufacturers and devices, the purchase of Softcard and the deal with major wireless providers should benefit Google Wallet by providing a more consistent user base.