Confirmed: Google Buys Softcard (Assets) To Better Compete With Apple Pay

Softcard was the reason mobile carriers initially blocked Google Wallet.

Greg Sterling on February 23, 2015 at 1:59 pm

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One could argue that Google Wallet was ahead of its time. When it launched it was blocked by wireless carriers (except for Sprint) that were involved in mobile payments joint venture ISIS, which became Softcard. It was rumored last month that Google was buying Softcard, which has been confirmed today. [See postscript below.]

In a blog post Google said:

[W]e’re excited to announce that we’re working with AT&T Mobility, T-Mobile USA and Verizon Wireless, as well as their mobile payments company Softcard, to help more Android users get the benefits of tap and pay. Under this relationship, the Google Wallet app, including the tap and pay functionality, will come pre-installed on Android phones (running KitKat or higher) sold by these carriers in the US later this year. We’re also acquiring some exciting technology and intellectual property from Softcard to make Google Wallet better.

Effectively what Google is doing is buying the troubled company to gain access to the carrier relationships, for the distribution. There’s probably nothing technical that Google gets with Softcard that it doesn’t already have or couldn’t build itself.

The rumored purchase price was $100 million or less.

Google arguably needed to gain this distribution for Wallet or potentially be at a competitive disadvantage vs. Apple Pay or Samsung, which just bought LoopPay to compete with Apple. Presumably Google Wallet and Samsung Pay (or whatever it’s re-branded) will co-exist on US Android devices. In such a case Google Wallet 2.0 will be bad news for S-Pay.

All this activity is happening now because Apple Pay has revived the NFC payments market in the US. But for Apple’s early success and momentum with Apple Pay, Samsung wouldn’t have bought LoopPay, nor would Google have bought Softcard.

Softcard was probably destined for ultimate failure. This transaction thus becomes face-saving in many respects. It likely also means that mobile carriers will not have a direct role in mobile payments. They may get a piece of the action however.

It’s rumored that Google will be paying (or considered) a revenue share to gain carrier buy-in and prominent placement on Android handsets. Either way Google Wallet gains new life — ironically because of and through its rivals.

Postscript: Google has clarified that it did not buy Softcard the company. Rather it bought IP and certain assets. Softcard and its app will remain in existence for the time being. However longer term the company will probably shut down (that’s my speculation).