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Softcard Buy will Boost Google Wallet

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Reports reveal that Google is currently in talks with Softcard to acquire the mobile payments company.

If the deal pushes through, Google will be paired with the biggest carriers in the United States in its bid to challenge the Apple Pay service in the burgeoning mobile payments industry.

Softcard, jointly owned by AT&T, Verizon Wireless and T-Mobile USA, laid off over 60 employees recently. Remaining employees of the company were told to cease operations while Softcard seeks a buyer for the business, sources said.

Google entered into exclusive negotiations with the mobile payments company through an offer to acquire Softcard for an amount of at least $50 million, said one of the sources.

PayPal, the online payments company that eBay is planning to spin off within the year, also previously showed interest in acquiring Softcard. However, the joint owners of Softcard prefer to deal with Google due to the fact all of them distribute smartphones that run on the Android mobile operating system developed by Google.

Google's mobile payment system, Google Wallet, was a pioneering system in the industry. However, Google Wallet has not gained traction with retail outlets partly due to Google's failure to sign up telecommunications companies to work with them on the service.

AT&T, Verizon and T-Mobile developed Softcard, which was formerly named Isis, as their own mobile payment system to ironically challenge the Google Wallet. However, Softcard similarly did not find success with both consumers and retailers.

The launch of Apple Pay back in November, and its apparent early success in its partnerships with several significant merchants, created a sense of urgency among the parties involved in the Google-Softcard acquisition talks.

The wireless telecommunications carriers currently have a revenue sharing model with Google, making a deal with the Internet giant for Softcard more appealing than one with PayPal. Google shares some of its revenue from searches made on Android smartphones and in its Play Store with the wireless companies.

The original vision for Google Wallet featured a closed-loop system for advertising that utilized the purchases made within physical locations for the improvement in the targeting of digital advertisements. The original proposal was to share some of the revenue from the advertisements with the wireless carriers, but the companies failed to come to an agreement for the revenue sharing.

If Google acquires Softcard, talks on sharing advertising revenues could be revived, placing both Google and the wireless companies in a position to better challenge Apple Pay.

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