Google pulls a Microsoft on Apple in digital wallets

John Shinal | Special for USA TODAY

Show Caption Hide Caption Struggling Google wallet finds new life with Softcard deal Google has secured a deal with three big wireless carriers to have Wallet pre-installed on Android phones, but this could mean the end of Softcard. Video provided by Newsy

SAN FRANCISCO — What, you own a phone without a payment system?

That question will likely be heard soon wherever early-tech adopters gather, now that Google and Apple have taken their smartphone software fight into the payments market with new ferocity.

Google's partnership with the largest U.S. wireless carriers is an attempt by the Internet advertising giant to jump-start its Wallet application, launched in 2011.

The Google payments app hasn't taken off with consumers even as its Android operating system vies with Apple's iOS for the lead in mobile here.

That left the door open for Apple, which entered the market headlong with its own Apple Pay service late last year.

There's stiff competition from other players, too, including credit card giants and new electronic-payments providers like Alipay, once a unit of Alibaba, and PayPal, soon to be spun out of eBay.

Now Google is trying another tack, via a partnership with Softcard, a payments venture from AT&T, Verizon and T-Mobile.

Among them are the same companies that first offered the iPhone, which is to say they're existing Apple partners making billions in revenue every year on services for Apple devices.

Yet instead of partnering with them on payments, Apple teamed up directly with banks and retailers for Apple Pay.

This is the hardware maker true to form: Going it alone within the tech industry while partnering outside of it.

Google's move, meanwhile, looks like an attempt similar to what Microsoft did to Apple long ago in PCs: partner with other tech giants and try to crowd its rival's innovation into an ever-smaller market niche.

Just how much market value is at stake in mobile payments is wide open for debate.

U.S. mobile consumers have always been a fickle lot, shifting tastes from razor-thin phones to all-in-one devices to video-equipped phones within a decade.

It could be that handheld consumers may come to view electronic payments as a utility.

If it's expected on every smartphone, the payments app war may remain just another battle within the bigger war between Android and iOS.

Yet U.S. mobile consumers have also been consistent in their willingness to pay a premium for reliable service and innovative features.

That's how wireless giants have been making huge profits from data services, while Apple has been doing the same with iPhones.

Likewise for small businesses that have to fork over a cut every time they accept either a MasterCard, Visa or other credit card.

If Google, Apple, Alipay, PayPal or someone else can develop a reliable, profitable electronic system, the stakes could be huge.

And with all of them developing payment systems, innovation is likely to drive the cost of payment processing lower, perhaps much lower.

If paying with a smartphone swipe becomes commonplace for iPhone and Android users, today's Google Wallet news may end up having a bigger impact on retailing and financial services than it does on the tech sector.

John Shinal has covered tech and financial markets for more than 15 years at Bloomberg, BusinessWeek,The San Francisco Chronicle, Dow Jones MarketWatch, Wall Street Journal Digital Network and others. Follow him on Twitter: @johnshinal.