Verizon Takes The First Swing In The Mobile Payment Fight

The NFC mobile payment war has officially started, with Verizon Wireless announcing that Google Wallet will be blocked on their new Samsung Galaxy Nexus smartphone. Verizon said they blocked the increasingly popular application for security reasons.

Verizon’s move is quite controversial, and brings up issues of “network neutrality” as well as “anti-competitive behavior.” Does Verizon have the right to block Google Wallet, an application freely accessible over the internet?

Regardless of whether this is within Verizon’s rights, it could be a glimpse into the influence that service providers will try to wield over the mobile payment market.

Google Wallet is currently the most widely recognized NFC mobile payment system in the U.S. It’s backed by Sprint, Citi, and MasterCard.

Verizon, AT&T, and T-Mobile have all agreed to back the competing ISIS mobile wallet, and will promote that once it is released in 2012. Verizon is clearly making a statement and trying to shift the market in favor of its own ISIS wallet.

It wouldn’t be surprising if AT&T and T-Mobile also make moves to block Google Wallet from their NFC equipped smartphones in the near future to further promote the proprietary ISIS software.

This may be a roadblock for Google, whose product seems to be near the cusp of mainstream adoption. NFC technology, which makes the mobile payments possible, is already set to become a global standard.

The 45 major mobile operators that make up the GSM Association have committed to implementing SIM cards with embedded NFC technology. This includes major players like AT&T, China Mobile, China Unicom, Vodafone, and Verizon.

In addition, users are ready to adopt too. KPMG’s latest Consumers and Convergence Report found a profound increase in acceptance of mobile payment techniques. In its survey, 66 percent of respondents said they would be willing to use their mobile phone as a wallet.

Thus, Verizon’s blockade of Google Wallet comes at a critical moment in popularizing mobile payment technology. The question is: how will Google respond to regain a piece of the market?

For now, Google fans have already made it possible to use Google Wallet on the new Samsung Galaxy Nexus using hacks. Although unsupported by Google officially, it sends a message that the “early adopters” like Google Wallet.

Google may find a way to take the issues to court, but it would not be a quick and easy case. Ideally, Google and Verizon will come to an agreement behind the scenes without causing a large uproar over the issue in front of the public.

Currently, Google has advantages in technology and experience with mobile payments, whereas Verizon, AT&T, and T-Mobile collectively have access to many more mobile phone customers.

It also remains to be seen how Verizon and the other ISIS advocates will deal with the mobile wallets of PayPal and Visa.