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June 21, 2005

Google Wallet musings

By Charlene Li

I’ve been asked for the past couple of days what a Google Wallet would mean (regardless of the fact that it hasn’t been announced!). PayPal dominates person-to-person payments today. So if I need to pay my brother back for a scanner he bought for me, or pay for an auction (on eBay, of course!) I’ll use PayPal. It doesn’t make sense for Google to only challenge eBay/PayPal in this area – even though it will bring in close to $1 billion in revenue for eBay this year.

Instead, I think (and hope) that Google is thinking much, much bigger.

I was at the Supernova conference yesterday and ran into transplanted Bostonite Scott Kirsner – we had a good discussion about how all of the new blog publishers would get paid for their good work. One of the ideas we tossed around was Google Wallet – AdSense already puts paid links on thousands of content sites, so why not also enable them for micropayments? Google is already very good at tracking and collecting clicks worth five cents each. Google could also offer be a subscription “pass” that securely grants users access to premium content on multiple sites, with each site getting a share of the payment based on usage.

And here’s another way that Google could leverage a payment system. Google is one of the largest backers of the new Atom standard, which helps syndicate content. Today, most of the content that’s distributed via RSS is news headlines, but I’m a strong believe that commerce-oriented content will be appearing soon. So what if Google were to come out with it’s specialized aggregators or Web sites that would use the open standard to receive items and information?

Here’s an example. Today, if you want to sell a song on iTunes, you have to cut a deal with Apple – painful, long, and not economically feasible for individuals. But what if I were to put together a mix of children’s songs (via Creative Commons) featuring my kids’? I could stream it out as an Atom feed, include payment information in it for Google Wallet, and have it aggregated on Google Music. Voila – we just created an open marketplace for music. Repeat the same recipe for video, ebooks, and yes, even technology research reports.

Sure, Google could launch each of these services using traditional payment methods – but that’s just not the Google way, nor is it ideal for consumers. Each of these payments are potentially very, very small – and having a centralized payment system will help consolidate all of those micropayments.


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» Whitman on Google Wallet from SiliconBeat
Forrester analyst Charlene Li offers one of the most detailed guesses we've seen yet at how the rumored Google Wallet payment system might work. We were curious what eBay is thinking about the rumors, so we asked CEO Meg Whitman during an interview tod... [Read More]

» For E-tailers, Google is Like a Drug from The Hitchhiker's Guide to 650
For e-tailers, Google is like a drug. It makes you feel real good about yourself (cause its profitable and helps your business grow), but you have a sneaking suspicion that it is really the one in control and one day you might need it more than it nee... [Read More]

» More Fun with Google Wallet from Tech Beat
Forrester Research analyst Charlene Li has some interesting thoughts about what Google might do with the online payment system it's supposed to be working on. I'm not so sure many people want to hassle with micropayments, but the suggestions about... [Read More]

» Whitman on Google Wallet from SiliconBeat
Forrester analyst Charlene Li offers one of the most detailed guesses we've seen yet at how the rumored Google Wallet payment system might work. We were curious what eBay is thinking about the rumors, so we asked CEO Meg Whitman during an interview tod... [Read More]

» Whitman on Google Wallet from SiliconBeat
(Updated with comments from Google CEO Eric Schmidt) Forrester analyst Charlene Li offers one of the most detailed guesses we've seen yet at how the rumored Google Wallet payment system might work. We were curious what eBay is thinking about the rumors... [Read More]

» More Fun with Google Wallet from Tech Beat
Forrester Research analyst Charlene Li has some interesting thoughts about what Google might do with the online payment system it's supposed to be working on. I'm not so sure many people want to hassle with micropayments, but her suggestions about... [Read More]

» Profile: Google Wallet from TechCrunch
Company: Google (Wallet) What is it? This hasn’t launched yet, but there is some buzz around the blogosphere (and the Wall Street Journal) that Google is planning on launching a competing payment service to PayPal. Is this Web 2.0? I thin... [Read More]

» Google Micropayments from chew shop
The SiliconBeat points us to Forrester analyst Charlene Li who offers one of the most detailed guesses they've seen yet at how the rumored Google Wallet payment system might work: Here’s an example. Today, if you want to sell a [Read More]

» Google Wallet business model innovations … from BusinessModelInnovation BusinessModelDesign
Charlene Li of Forrester Research develops some very interesting thoughts on the things (aka business model innovations …) Google might have in mind with their coming online payment system … one of them is paying for subscriptions and for ... [Read More]

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Paypal (and eBay) is a near-monopoly. Competition of any kind is good for consumers. Either that or get the post office involved in managing micropayments. However, your point regarding Google Wallet is a good one -- Google has always thought big and then, left ideas to gather dust. Their original APIs are a great example of this.

Tony Brice

Great idea but let's take it a step further... Why not expand the wallet, at least in the case of music, into a complete clearing house by including licensing and royalty settlement? Here's how it could work --

Let's say you create a mix of your 10 favorite 70's classic rock songs. When you pay with your Google wallet, Google integrates all associated licenses and royalties. Then, assuming Google also maintained a database of downloads(purchases), they could send payments due to everyone involved -- mechanical royalties direct to publishers, master use royalties direct to the associated record labels, and performance royalties direct to the performing rights organizations (BMI, ASCAP, SESAC, SOCAN, etc.).

On the surface, it seems to me that publishers, labels, the PRO's, should ALL be interested in seeing something like this happen -- ultimately the royalties would be getting paid by the consumer of the music in increments so small they probably wouldn't inhibit the purchase.

The additional benefit is that EVERYONE could get into the business of selling ANY music and not worry about all the legal issues currently swirling around peer-to-peer. Of course, if the Supreme Court rules in Grokster's favor in MGM vs. Grokster all bets are off (and LOTS of songwriters I know will probably move on to more rewarding, but less satisfying, careers...).

Dave McClure

very few people have the capability to challenge PayPal on payments -- most particularly because of their fraud prevention capabilities. a number of competitors both large & small have been left by the wayside while PayPal keeps rolling (Citibank's c2it, Yahoo's PayDirect, even eBay's own earlier attempt BillPoint).

that said, Google (along with Amazon, not to be forgotten with all their 1-click payment into) is one of the few that could mount a challenge.

PayPal's main advantage has always been simplicity. When i ran the PayPal Developer Network program, i used to brag that we put the entire code for the PayPal SDK on the back of our 2003 developer conference t-shirt -- about 9 lines of HTML.

So many people overlook the benefits of a very butt-simple cut & paste HTML solution for small sellers w/o technology sophistication. My group did a bunch of PayPal add-ins for FrontPage, Dreamweaver, and even Outlook (and more recently QuickBooks) that made it easy for people to integrate PayPal.

Still, Google is no stranger to simplicity and could take this idea and run with it using their own audience of AdWords advertisers and AdSense affiliates -- guessing these are the most likely initial audiences they would work with to promote a payment option.

PayPal's main disadvantage these days is it's difficult for them to move quickly, and the platform has begun to take on "legacy" attributes. Since they are supporting so many countries & currencies & payment flows, only the most important changes & initiatives get moved to the front of the production schedule.

after last year's PayPal Web Services API introduction, the new PayPal Website Payments Pro offering is one of the few examples of platform innovation that has rolled out. remains to be seen if it will get traction, but worth checking out.

ultimately, Google has a lot of work to do to compete with PayPal. but if they use their existing audiences & focus on innovative approaches they could make a hell of a lot of progress where PayPal is moving slower under the weight of 70M users.


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By all means, invest in technology...

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Ken Danieli

I think the WSJ may have overstated the ambitions of Google Wallet project (and then the other media jumped onboard their speculation) as the Google CEO came out the next day and said that they are not pursuing anything in the space that PayPal dominates.

I've always found that PayPal works great for person-to-person payments, for subcription payments and receipts, and for buying from companies that sell though other sites, like eBay. I've never had a problem with it and I've been using it for a lot of years.

I don't really see a need for a separate wallet program -- and I've tried several of them over the years, including MSN Wallet and eWallet. I mostly just tried those to take advantage of lucrative trial offers. I've used a password and form-filling identity utility to store my information locally for years and I use PayPal frequently to make my other payments.

Stew Langille

While I was CMO at iKobo Money Transfer from 2002-2005 we saw a number of competitors enter the payments space, big and small. The difficulty about the industry is the ROI given the fraud challenges. Dave McClure is correct in saying that a new competitor with the resources to begin from scratch and the convergence opportunities to serve complementary products will have great potential. My guess is that Google will not directly enter the payments space due to fear of fraud. I think that they will develop a payment system for their advertising network. eBay learned that it is easier to acquire a payments business than build one. I'm sure that Google will soon learn the same.


Cynthia Typaldos




I wonder if anyone thinks of the people without creditcards. A new payment option has to include other ways to make payment, because I think it really blocks businesses who only accepts CCs as payment.
As for PayPal, never again! After calling them to stop a payment request taking $500 off my chequeing account, they couldn't. Yes, I emptied the account, but 2 days later I was charged with a NSF. $35. Not enough reason? 5 days later I was charged again, because the request was still going through! You can't do financial transactions like that.

Chris De La Rosa

Let's hope the wallet finally give PP some competition. PP's customer support, well lack-off prevents me from using thier service unless it's absolutely necessary. I'm all for Google giving us another option.

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