Friday, February 27, 2015
Softcard, formed in 2010 by mobile networks AT&T Mobility, T-Mobile USA, and Verizon Wireless under the name Isis, marked a strategic shift for the competing cellular networks. Chief Executive Officer Michael Abbott described the venture as a four-sided market that included consumers, merchants, parent companies and mobile network carriers. The coalition of arch competitors was formed to compete against Google Wallet, an Android app initially launched on the Sprint network using Nexus 6 phones.
Consumers can use the multifunctional Google Wallet app to make in-app and in-store purchases and money transfers. Google Wallet is compatible with near field communication (NFC)-enabled and older POS devices. For years, Google Wallet was only available on the Sprint network while being effectively blocked by the coalition of carriers that supported Softcard. Today, Google Wallet is available on any carrier network and NFC-enabled Android device running 4.4 KitKat or higher.
After competing for five years, the merger of former rivals Google and Softcard opens a new chapter in the mobile wallet wars. Google stated its plans to deploy a new version of Android Pay in its new phones beginning in May 2015. The improved mobile payment scheme and preloaded phone app is expected to strengthen competition with Apple Pay, CurrentC, PayPal, and other leading mobile payments schemes.
Jim Stapleton, Chief Sales Officer at Softcard, presented a video at the 2011 Smart Card Alliance Mobile and Transit Payments Summit that showed a consumer tapping a mobile wallet in a coffee shop, store and subway turnstile. Stapleton gave five reasons why consumers were ready to use mobile wallets: convenience, freedom from carrying cash, use of mobile coupons, choice of coupons/points/ redemption, and improved loyalty rewards.
Citing statistics from a Forrester Research, MarketResearch.com and Oliver Wyman joint survey, Stapleton said that 58 percent of all consumers polled said they would use a mobile wallet in mass transit. He went on to predict that mobile payments would grow from $5.2 billion in 2009 to $56.7 billion in 2015. Allowing for delays in deployment and adoption, this forecast is consistent with projections from digital marketing agency eMarketer, which expects mobile wallet commerce to top $60 billion in 2017.
In September 2014, shortly after renaming the company Softcard to distance itself from the terrorist group ISIS, the company was dealt another blow when Apple Pay entered the market, effectively locking Softcard out of Apple iPhones. Unlike Softcard, Apple Pay’s launch was a marketing triumph, as the app was widely available throughout the United States on the day it was released. Apple Pay’s ease of use, unlike Softcard and other mobile wallets, requires fewer strokes to activate the app and make payments.
Payment analysts noted continuing delays at Softcard followed by the January 2015 work force reduction that affected 60 employees and led to speculation that Softcard would either be acquired or have to close its doors.
In conjunction with consolidating their mobile app and footprint, Google and Softcard stated the Softcard app would no longer be available on Windows phones. This news may have little impact on consumers, since the app was only released in November 2014. Additionally, Microsoft plans to launch its own branded mobile payments solution, Wallet Hub, in the near future.
In the FAQ section of its website, Softcard advised current users to continue using their Softcard apps at the 275,000 locations across the United States where it is accepted. “Google has acquired some technology and intellectual property from Softcard and we encourage our Android users to download Google wallet,” Softcard stated. “In the near future, the Softcard app will shut down and all wallets will be terminated. A specific termination date will be provided soon.”
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