Google Wallet Card: An old twist to a new tech

Google Wallet

Trust Google to bring a new twist to something old, and then put the old tech back into the fray in a still more innovative offering. Earlier today, Google announced Google Wallet Card, a product that is meant to provide offline or physical access to your otherwise online Google Wallet account. To those fond of downloading premium Android apps, buying premium content and subscribing to online publications via Google Play, Google Wallet makes everything convenient. Just define your sources of funding, and you’re all set to go.

One card to rule them all

Bringing together your different sources of funding does have other potential uses, however. Apart from letting users easily pay for online goods, this can potentially slim down your wallet. Case in point: a new startup called “Coin” just raised $7 million in funding to combine multiple credit cards into one magnetic card. Coin’s plastic card can switch across different credit, debit or magnetic-stripe based loyalty card with the push of a button. And because it works alongside your mobile device through Bluetooth, you’re assured of the security of transactions (it does not work if not within range of your phone).

Google’s product is aimed at doing a similar job, only better. Google already has a captured market of hundreds of millions of Android and Google Play users to date. Users from the US simply need to order their Google Wallet card and it will come in the mail a week or two.

To my mind, Google Wallet Card is likely to compete head-on with the likes of Coin — both products aim to consolidate your multiple bank cards into just one, although using different methods. With Card, the package includes a card-reading device like Square, which you can plug into your smartphone to read the magnetic data. With Google’s system, you just add each card as a funding source on Google Wallet, and you will need to ensure Google Wallet has enough funding, so you can use the physical card to either pay at point-of-sale or withdraw at ATMs.

A big difference: Coin costs $100 ($50 for early supporters), while Google Wallet Card is free.

Card or coin?

Which brings us to the question of the use of virtual money. Today, it’s not just Google Wallet, Apple Passbook or even Coin that’s making waves in the digital currency scene. A de-centralized crypto-currency called Bitcoin is also gaining popularity. It’s as portable as cash, it does not come with regulatory restrictions, and it can be anonymized through the use of networks like Tor. It’s like paying in cash, but better.

An even bigger potential with Bitcoin is its value. Since its floating exchange rate is not based on international trade or other similar factors, only market forces dictate Bitcoin’s value. As of this week’s congressional hearing, Bitcoin surged to a record $900 per BTC, on account of Obama administration officials’ opinion that not regulating virtual currencies might be helpful to the economy. This comes from Fed chairman Ben Bernanke, as well as other economic authorities in the country.

Of course, there’s the downside. In the recent weeks also, the FBI raided Silk Road, a popular destination for black market e-commerce. The currency of choice: Bitcoin. The digital currency actually fell in value during that time, although it promptly returned to reasonable levels.

Google, Card, Bitcoin, and other related companies are trying to address the age-old need to establish a sustainable ways to transact online that is also easy to manage. Back in the 1990s, there were all sorts of ideas floated as supposed replacements for money. Only a few, like venture-backed PayPal, survived the dot-com bust. In fact, PayPal has become the de facto online payment method for both services and e-commerce, even amid its shortcomings. Now Google, et al, are trying to change the game again in their own ways.

Why a physical card is good

Using a physical card that you can swipe is actually a novel idea. Using tap-to-pay and other methods, like the recently-launched ISIS, do come with a learning curve. Most people are used to just handing over a card and signing the receipt. This does not require any new infrastructure, too, since you have point-of-sale terminals practically everywhere. And so this mix of old and new tech is an excellent means to encourage users to go digital without letting go of their analog methods.

Who will eventually win? A company that consolidates funding sources into just one card? A de-centralized currency? Or something in between?

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