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Alphabet Inc.’s decision to discontinue Google Pay in the U.S. market, including its peer-to-peer payments capability, effective in June is not entirely an unexpected move, experts say, as the app has a more popular sibling in Google Wallet. And, they note, it lacks the market share of competing digital wallets.
Alphabet, which announced the move last week, will continue to make Google Pay available in India and Singapore. Alphabet’s plan is to transition Google Pay users to Google Wallet, which the company says is used five times more often than the Google Pay app in the U.S.
Google Pay users in the U.S. will be able to continue accessing the most popular features of Google Pay in Google Wallet, such as tapping to pay in stores and managing payment methods, Alphabet said in a blog post Thursday.
Given the higher usage of Google Wallet in the U.S., the decision to discontinue Google Pay is a way for Alphabet to simplify its wallet strategy. “Google Wallet and Google Pay are functionally parallel apps from a payment perspective, and Google Wallet has more capability and flexibility,” Thad Peterson, a strategic Advisor for Datos Insights, says by email. “It makes sense to simplify the capability from a branding and marketing perspective and at the same time eliminate any possible confusion between the offerings.”
Google Pay’s inability to win meaningful market share in the U.S. is another likely factor in Alphabet’s decision. Despite a highly touted redesign in 2020 intended to make Google Pay more muscular in the wake of stiff competition, the wallet never really achieved the adoption of competing wallets such as those of PayPal.
“We don’t see Google Pay having a lot of market share compared to other wallets, such as PayPal and Apple Pay, and one-click checkout apps,” says Sheridan Trent, director, market intelligence, for TSG. “The competition among digital wallets in the U.S. is fierce.”
Now that Alphabet has made the decision to go all-in on Google Wallet in the U.S., the challenge it faces going forward is formidable, experts point out. “[Alphabet’s] challenge now is to ensure that Google Wallet meets customer expectations and evolves in value for the end users and participating payment acceptors,” Peterson says.
Google Pay emerged in 2018 as a merger of two apps, Google Wallet and Android Pay. In 2022, Alphabet began planning a comprehensive wallet that could house documents and perform other payment and non-payment functions. This effort resulted in the new Google Wallet.
