Google’s recent change in its digital wallet strategy puts the consumer in charge when choosing whether to use the wallet tool, but some industry experts say that Google may also begin collecting interchange fees.
The new strategy allows consumers to put any payment card into Google Wallet while the company acts as a middleman in Wallet transactions. Zilvinas Bareisis, a senior analyst at Celent, said that the transaction economics “are no longer obvious,” American Banker reports.
“In the intial set-up, Google was clear that they would not take a cut on the payment transaction, and the merchant would have paid a standard fee depending on the card used,” Bareisis said, according to American Banker. “Now, from the merchant point-of-view, they are accepting a prepaid MasterCard, while it might [be] an Amex card that actually funds the transaction. Does it also mean that Google Wallet will have to establish relationships with the acquirers to recoup from merchants any potential differences in transaction costs? Or will it have to charge the end user for ‘loading’ their wallet, something that other prepaid card providers do for card-based reload instructions?”
Some experts believe that Google will not begin collecting interchange fees until the company begins to see profit from advertising revenue resulting from Wallet use.
“To fully do that, they would have to stop pissing off the regulators when it comes to privacy matters,” Jim Van Dyke, the president and founder of Javelin Strategy & Research, said, American Banker reports. “Which is a good example of why non-financial companies avoid the more heavily regulated financial sector.”