The chief of the Google Wallet operation has resigned to pursue new opportunities, another sign of continuing troubles in convincing U.S. smartphone users to adopt mobile wallets using NFC technology.
In a statement on Wednesday, Googel said that Osama Bedier, vice president of wallet and payments, has decided to leave Google "this year to pursue other opportunities. He's achieved a lot during his time here and we wish him all the best in his next endeavor."
Google pledged that it will continue support the move to mobile payments. "Payments are a big part of what people do every day, and we're committed to making them easier for everyone."
In a blog post, Yankee Group analyst Jordan McKee said the departure of Bedier is a sign of troubles Google has had in convincing users to use the payment technology.
"Bedier's exit is indicative of the troubles Google Wallet has been facing since its inception," McKee said. "Two years after launch, Google's initiative remains stagnant, failing to gain traction in the mobile payments ecosystem."
McKee said that consumers are dissatisfied with the mobile payment approaches underway in the U.S., but added that some problems are specific to Google Wallet. Over the past year, for example, other Google Wallet team executives "who were undoubtedly disappointed by the lackluster success of their project" have left the company, he said.
So far, Google Wallet is still only supported on several smartphones that are embedded with Near Field Communication, or NFC, technology from one major carrier, Sprint.
Isis, an effort by a consortium of AT&T, Verizon Wireless and T-Mobile USA to use NFC phones, has stalled and will, along with Google Wallet, "remain stalled for quite some time," McKee said in an email to Computerworld..
McKee and other analysts cited an array of problems with NFC adoption in the U.S., though NFC-ready smartphones are widely used for transit and retail purchases in South Korea, Japan and some other countries.
While NFC chips are quickly being added to new smartphones, they remain absent from Apple's popular iPhone, analysts said. Another issue: Merchants haven't been willing to pay to upgrade sales terminals to accept NFC payments.
Even Bedier publicly admitted last October that despite widespread support for NFC from banks, wireless carriers and credit card companies, it will likely take three to five years for widespread U.S. adoption of NFC-ready smartphones and payment terminals.
Meanwhile, some retailers rely on QR codes to process payments and coupons with optical readers on smartphones. Starbucks has seen success with using its customer's optical readers on smartphones to read barcodes to pay for coffee with a Starbucks card.
A big factor in the slow adoption of mobile payments in the U.S. is the sheer number of credit card, check and cash users, and the reluctance by Americans to trust the security or ease-of-use of NFC on a smartphone, analysts believe.
"There's heavy reliance on cash and credit cards today," McKee said. "Wallets like Google's are struggling because they fail to realize that payments aren't broken. Payments today work just fine, and any wallet that is simply a credit card in a different form factor will face an uphill battle to gain traction.
"The most successful wallets like Starbucks are gaining traction because they have integrated loyalty and couponing. For the merchant and the consumer, this approach presents a compelling use case, leading towards adoption on both ends of the equation," he added.
McKee and other analysts still have strong faith in the superior security of NFC, especially compared to credit cards that have only a magnetic strip. Credit cards with smart chip installed are in greater use in Europe and other regions, partly because banks in those regions are concerned about credit card thieves using magnetic credit cards that are easier to hack.
"I truly believe that NFC is the most efficient and effective way to interface with the world around us," McKee said. "However, it will take some time for NFC to gain ubiquity. In the meantime QR codes are serving as a decent interim solution."
Yankee Group issued a forecast in March that predicted $60.7 billion in global NFC transactions for all of 2013. The report forecast that the number is expected to soar to $531 billion in 2017.
McKee believes a turning point in favor of NFC in the U.S. will come in October 2015 when all merchants in the U.S. must either upgrade their point-of-sale terminals to accept what is known as EMV smart chip card transactions, or accept the liability if any fraudulent transactions occur at their terminals if don't upgrade.
Most if not all EMV terminals will be able to accept NFC payments. EMV stands for Europay, MasterCard and Visa, a global standard for interoperability of smart chip cards.
Yankee Group believes that by 2017, NFC payments will trump QR code payments, McKee said.
The slow adoption of NFC in the U.S. is particularly shown in lack of transparency by Google and Isis over the pace of mobile wallet adoption with NFC.
Isis launched in Salt Lake City and Austin, Texas, last year, and then released some promising stats earlier this year that failed to include the sample size, McKee said. "So it's really anyone's guess as to how well things are going for Isis," McKee said. "Isis has been about as transparent as mud."
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt's RSS feed . His e-mail address is firstname.lastname@example.org.
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This story, "Google Wallet Chief's Resignation Another Bad Sign for NFC" was originally published by Computerworld.