Google (NASDAQ: GOOG) has acquired Softcard, the mobile payments joint venture backed by Verizon Wireless (NYSE: VZ), AT&T Mobility (NYSE:T) and T-Mobile US (NYSE:TMUS). As a result, Google Wallet will now be pre-installed on Android phones (running KitKat or higher) sold by these carriers in the U.S. "later this year," Google said.
"Softcard has completed a deal with Google to bring together leading technologies to advance mobile wallets. Google has acquired Softcard technology and capabilities to power the next generation of mobile payments," Softcard announced on its website. "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 news doesn't come as a complete surprise. Last month, TechCrunch, the Wall Street Journal and the New York Times reported that Softcard was up for sale and that Google, PayPal and possibly others were considering buying the company. Softcard was founded in 2010 as a way for Verizon, AT&T and T-Mobile to have a stake in the emerging mobile payments space (Sprint never signed on to support Softcard and instead has installed Google Wallet on its Android phones.)
But Softcard never appeared to catch on with users. The company in January said it cut 60 jobs in a restructuring, shortly after it rebranded itself from Isis in order to distance itself from the extremist Islamist militant group that was sometimes referred to as ISIS. TechCrunch reported earlier this year that the company was burning through a half a million dollars per day, or around $15 million per month.
Google's acquisition of Softcard could give its Google Wallet service a boost. Google introduced its Google Wallet service in 2011, and has revamped its services and approach to the mobile payments market several times since then. Indeed, Google is reportedly preparing to unveil a new mobile payments service at its I/O developer conference at the end of May, according to a recent Wall Street Journal article. Google's acquisition of Softcard appears to underscore Google's plans to double down on the mobile payments space--a notable position considering the increased competition in mobile payments.
Apple late last year introduced its Apple Pay service, available on its iPhone 6 and 6 Plus. And Samsung last week acquired LoopPay, and said it plans to integrate LoopPay's payments technology onto its forthcoming phones. Meantime, the Merchant Customer Exchange, which is a mobile payments alliance among retailers like Target and Walmart, plans to soon release its CurrentC payment service. And PayPal and others continue to work to stand out in the mobile payments space.
There appears to be a lot at stake in mobile payments: Companies that successfully allow users to both for goods and services from their phones potentially can get a share of those revenues, and also can create a marketplace for loyalty cards and other such services. According to eMarketer, payments in the United States made with a smartphone at the point of sale in place of a credit card or cash totaled $3.5 billion in 2014. The firm said that figure ought to grow to $27.5 billion in 2016 and fully $118.01 billion in 2018. The firm counted 15.9 million people in the United States using "mobile proximity payments" in 2014, and eMarketer predicted that number will grow to 57 million by 2018.
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