Google Wallet mobile payments system launched to public

by Nikhil Joseph 0

The Guardian has an interesting,if methodologically dubious, piece on the use of Google Wallet and what wentwrong with it. Using the Google Play store’s estimate of between 10-50 milliondownloads as a starting point, it goes on to calculate the percentage of oneand two star reviews and discounts these to arrive at an estimate for whatfraction of Google Wallet users are “actively” using the app. Leaving aside thefact that app reviewers are almost always a highly skewed sample ofself-selected individuals with extreme opinions either for or against (50,000reviews out of a minimum of 10 million downloads is less than 0.005% of thepopulation), what does “active” even mean in this case? That a user has usedthe app to complete at least one transaction a week? A month? A year? Thearticle doesn’t say.

But of 20m downloads, how many mightbe active? Once again, Google hasn’t released any information.

Of 50,000 Google Play reviews, atotal of 7,135 (14.4%) are one-star reviews – which typically use phrases like“doesn’t work” – and 1,699 (3.4%) are two-star reviews, using phrases like “notfinished” or “refuses to work after update”.

If we assume that those who gave theapp one or two stars are not active users (which seems reflected in theircomments) while those with three or more stars do use it, that suggests there areabout 16.4 million devices using Google Wallet in the US. If one assumes thatonly the proportion who give it one star don’t use it, the figure is 17.1m.

There’s also no citation forwhere the $37 billion estimate for mobile transaction volume stated in thearticle comes from. It doesn’t define what exactly is encapsulated by the termeither. Does it only refer to mobile initiated transactions carried outin-store through NFC, Bluetooth, or QR code (a category we at Mercator refer toas mCard)? Or does the figure also include card swipe transactions completedthrough mPOS dongles attached to a smartphone or tablet? Again, we don’t know.

The total value in the US of mobilepayments (which includes both Google Wallet and the carriers’ own Softcard,recently rebranded from Isis) in 2013 was expected to be $37bn, up 50% from$24.7bn in 2012.

Mercator Advisory Group’s bestestimate for mCard transaction volume (which are in-store and initiated by thecustomer’s smartphone) in 2014 is closer to $2 billion dollars, with over 80%of the transactions processed by the Starbucks app, not Google Wallet, notSoftcard and not Apple Pay (at least not yet).

In the excitement to be the firstto herald the dawn of the new mobile payments age, industry observers andjournalists mustn’t shirk the responsibility of defining exactly what category ofpayments they are talking about and think carefully about the methodologicalassumptions they make while putting out an estimate. This is especially true ifyou are doing so from the pages of The Guardian.

Overview by Nikhil Joseph, Analyst for the Emerging Advisory Service for Mercator Advisory Group

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