GPhone and Google SMS Payments? Ehhhh….

I just read this piece on Google’s patent on an SMS based payment system (via techcrunch). It discusses the patent that Google took out on an SMS based payment system. The gist of it seems to be contained in this quote:

The payment process may occur through the simple composition by the payor of a text message that includes identifying information for the payee and an amount of the payment. The message may then be sent to a payment processing system, which may debit an account of the payor (i.e., reduce it in value), credit an account of the payee (i.e., increase it in value, such as monetary value), and notify either or both of the payor or the payee that the money has been transferred.

TechCrunch reasonably wonders if this is going to be the rumored GPhone’s killer app - a way to catch up with the rest of the world to conduct payments via the phone. From all the various teeny tidbits I’ve heard, I’m pretty skeptical that this is going to be anything significant for at least the short to medium term. It’s more or less what PayPal offers, just over SMS. There needs to be a pretty wide spread infrastructure for this to take off - all the vendors and vending machines will need to support some kind of backend to receive validated payments.

They’ll need some kind of bluetooth action to speak to an app on the GPhone to tell it who and how much to send the payment to (presumably any system that will make someone physically transcribe a dollar amount and the person to pay’s information will never take off as a mainstream thing). The vendor will need to get identification information from the GPhone and will also need some means to receive validation from GPay that this has indeed been payed. All that needs to happen atomically, which seems like quite a feat since sms is a one way event - you can imagine if you send payment fine, but the vendor has a little glitch and thinks you haven’t payed, that could be quite a difficult situation.

None of which is to say that such a backend infrastructure couldn’t be created, but it doesn’t exist and is a chicken/egg type of situation. The backend isn’t going to exist without widespread user base, a user base which can’t grow without the backend being there. Look at contactless payment systems as an example - something that the credit card companies have been trying to push for years, they’re starting to have some marginal success now, but it is by no means widespread. And that’s the credit card people who already have an in with all the people who accept credit cards and they just need a different card reader, not even a big change to the backend.

So, as I have been led to believe that the GPhone is not going to be pushed by any of the big telcos in the states and is being made by HTC a good but small handset maker, they simply are not going to get the gigantic user base they need to make that payment system viable. Additionally, even if the system is to work, I doubt it would be a GPhone killer app - to get to the scale they’d need they’d want to get this app on every phone. I’m still interested to see what Google comes up with, but to be honest, I am skeptical that it will be anything overly great.

Sep 2nd, 2007 · Comments RSS · · · · · Tags: google · gphone