Working the Bit-Pay booth at CES this last week, Stephen talked with someone from
[redacted] large retailer who just got done testing Google wallet in their lab.. They said they were not too excited about it costing $500 per POS for proprietary hardware and then a 5% transaction fee for the privilege of using it and still being stuck with the fraud and privacy issues.
This seems to be an obviously large barrier to overcome in offline transactions.
But how does the online functionality compare?
Obviously it is akin to the credit card system is accompanied by the usual inquisition for personal data. However it also seems like there is a significant amount of online retailers who have signed on to accept this payment method. This creates something that bitcoin does not have, a significant marketplace for the use of this payment method.
Also this is not a new threat, as this has been anticipated for a while, but now that this is released evaluating its direct impact on current, future, and potential bitcoin use may be easier to analyze.
Key point: This is not new way of transacting online. The only key benefit that google offers users online is that people may have to manage fewer passwords. This is only offered in return for placing your personal information in yet another location online.
IMO I cant really see them grabbing a lot of market share from current consumers online. If you are already purchasing online, from ebay or amazon or any other major online retailer, that means your personal information, credit card, and user information already exists at these sites.If the primary target market is current online shoppers, I dont see them making a successful case for this.
The other target market obviously is brick and mortar retailers. This is a very difficult market to penetrate as well. Leaving aside the barrier to entries mentioned above, you are tying the google wallet to a credit card you already have. You are asking people to put their personal information at risk to be able to use their phone to pay, rather than the card that is sitting in the other pocket.
Its hard to see what their aim is, other that merely trying to position their brand in the marketplace in hopes they can leverage that later in bringing a better product to market. A sufficient marketing campaign could establish that irregardless of the performance of the product in the marketplace. However all of this I would see as being very capital intensive, and it would be very hard to make the case for any significant returns on this investment. Especially over the short to medium term.
Most likely this is either a loss leader, or a part of some larger strategic objective. At this point however it doesn't directly challenge the bitcoin technology, although it may position google to do so at a later date.
Any thoughts? Am I wrong? What did I miss?