Google Inc (NASDAQ:GOOGL) is headed towards bracing its own wallet to be able to compete with Apple Inc. (NASDAQ:AAPL) Pay by acquiring Softcard, a mobile payments company. Similar to Apple Pay, Softcard uses NFC technology that allow users of Android and Windows phones to make mobile payments for purchases through its app, and the company claims that more 200,000 U.S. merchants can accept payments using its platform. An earlier coverage by TechCrunch reported that Google offered to buy Softcard, citing unnamed sources. Apart from Google, PayPal and Microsoft Corporation (NASDAQ:MSFT) is also said to have expressed interest in acquiring Softcard. For its part, PayPal is also bracing its efforts at mobile wallet after the launch of Apple Pay, which has gained worldwide attention shortly after it was introduced.
Although Google Inc (NASDAQ:GOOGL) currently has its own payments service, called Google Wallet, which also happens to be the first platform in mobile payments, it has not gained momentum with users due to lack of telecom partners that could help in promoting the service. With Apple Pay from Apple Inc. (NASDAQ:AAPL) now in the market, the search giant needs to strengthen Google Wallet, and Softcard happens to fit what Google needs to do it. Softcard, a venture between AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), and T-Mobile US Inc (NYSE:TMUS), has retrenched 60 staff just last week and advised remaining employees to stop work while the company is looking for a buyer, according to sources cited by Digits, a tech news and analysis blog of The Wall Street Journal.
Google Inc (NASDAQ:GOOGL)’s offer for Softcard is $50 million, according to the source from Digits. The price is seen as a bargain for a mature mobile payments system supported by mobile networks. But Softcard, formerly known as Isis, is known to be in financial straits, and have endured a burn rate of as much as $15 million a month at times during its five years in operation. Although Google could use Softcard in beefing up its own mobile payment infrastructure, sources said that the search giant is interested in Softcard’s patents, which totals more than 120 overall.
Google Inc (NASDAQ:GOOGL) currently has a working system for sharing revenues with mobile carriers, as it already shares some of its profits earned from searches on Android phones and from its Play Store with wireless telecom companies. Google Wallet, which uses a closed-loop advertising platform, originally intended to share revenue with wireless carriers, but no common ground for agreement was put in place. According to the source of Digits, a successful Softcard buy-out deal can revive talks between Google and the mobile carriers regarding such agreements, and the joint venture will eventually put both the search giant and the telecom companies in a better position to counter competition from Apple Pay.
This article has been written by Nonito Guntan.
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