The era of mobile payments is officially here, and while Google (Nasdaq:GOOG) is credited with being a pioneer, investors may not want to place another feather in the company's cap just yet.

Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

The company launched its Google Wallet service back on September 19 when it first allowed users of the Nexus S 4G phone to make an in-store retail purchase by scanning the smartphone (pre-loaded with credit card information) rather than the requiring the actual credit card to be scanned.

Interesting? Sure. But despite Google's early lead, this is one race the tech giant isn't poised to win. (For more on digital payments, check out New Technology: Pay Without Your Wallet.)

Not That Simple (for Google)
Google was the first to make it functional, and its mobile-payment framework may well be the model for its competitors in the future. Google didn't - and couldn't - do it alone though, which is the weak spot in the armor.

For starters, the retailer has to be equipped to process payments using a smartphone as a device. Though some major names like OfficeMax (NYSE:OMX) and Radioshack (NYSE:RSH) are ready to roll, only fourteen retailers are signed up to offer the service so far, with only eight more on deck.

In addition, the phone's mobile network provider has to be on board, technologically speaking. The only service provider offering Google Wallet is Sprint-Nextel (NYSE:S), leaving other carriers like AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ) behind. And, for now, the payments only process MasterCard (NYSE:MA) credit card accounts.

The funny thing is, those other wireless carriers don't really seem to care.

As it turns out, both AT&T and Verizon, through the ISIS mobile payment group, are spending $100 million on their own near-field communication technology, which is what makes a phone capable of making a digital payment at a point of sale. Moreover, industry analysts largely view the likely ISIS solution as superior to Google Wallet in most every way. The consortium is said to be bringing more banks like Visa (NYSE:V) and Discover Financial Services (NYSE:DFS) and more merchants into the loop. And, this version of a mobile wallet is expected to be accessible on more phones than just one, unlike Google's initial offer.

To be fair, Google could widen its net in the future. If a competitor beats them to the punch with consumers though (as it seems may be the case), it will be doubly difficult to win those customers over.

The Bottom Line
There's still no word on when the ISIS rollout is going to happen, but given that Google's already up and rolling, it's likely to be sooner than later. The rumored launch is "early 2012."

Once ISIS, Verizon Wireless and AT&T along with all the major credit card companies and a so-far-unknown number of retailers collectively unveil their version of a digital wallet though, it may well define the industry - and generate revenue - in a way Google hasn't been able to yet simply because it's bigger, more flexible and available on more phones. Google has about four to five months to address that looming reality.

It's a big deal for one simple reason - mobile payments are expected to reach $670 billion per year by 2015. Assuming Google Wallet's standard 2% transaction fee (paid by the seller) applies to the ISIS consortium as well, that's $13 billion up for grabs on an annual basis - a figure that will surely grow every year. (For more on other alternative payment forms, check out 5 Money Transfer Technologies And Their Risks.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Budgeting

    The 7 Best Ways to Get Out of Debt

    Obtain information on how to put together and execute a plan to get out of debt, including the various steps and methods people use to become debt-free.
  2. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  3. Credit & Loans

    Don't Get Burned by High Credit Card Rates

    The average card charges 11.8%, and some rates top 20%. Experts warn that credit card interest may remain steep.
  4. Savings

    How Volatile Exchange Rates Affect Your Vacation

    Those ever-changing fluctuations can make a difference in anything from your hotel room to an ATM transaction.
  5. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  6. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  7. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  10. Credit & Loans

    Can Corporate Credit Cards Affect Your Credit?

    Corporate cards have a hidden downside. If the company fails to pay its bills, you could be liable for the amount and end up with a damaged credit rating.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Transferable Points Programs

    With transferable points programs, customers earn points by using ...
  3. Luhn Algorithm

    An algorithm used to validate a credit card number.
  4. Roll Rate

    The percentage of credit card users who become increasingly delinquent ...
  5. Truncation

    The requirement mandated by the FTC for merchants to shorten ...
  6. Purchase Money Security Interest ...

    A security interest or claim on property that enables a lender ...
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!