Google is in talks to acquire mobile-payments company Softcard in a deal that would pair the internet giant with the largest US wireless carriers to battle Apple and its new Apple Pay service, according to people familiar with the matter.
Softcard, owned by AT&T, Verizon Wireless and T-Mobile USA, laid off more than 60 employees last week and remaining staff were told to stop working while the business sought a buyer, two of the people said.
Google recently entered exclusive negotiations with Softcard by offering to buy the business for at least $50 million, one of those people said. PayPal, the payments business that eBay plans to spin off this year, also expressed interest in Softcard, two of the people said. They said Softcard’s telecom-company owners prefer Google because they all distribute phones that use Google’s Android mobile-operating system.
Representatives for Google, AT&T, Verizon, T-Mobile, PayPal and Softcard declined to comment.
Google has a mobile-payments service, called Wallet. It was a pioneer in mobile payments, but has gained little traction in stores in part because the internet company failed to get telecom companies like Verizon to cooperate.
The telecom companies created Softcard, formerly called Isis, as their own mobile-payments service to compete with Google Wallet, but Softcard also failed to catch on with consumers.
The arrival of Apple Pay in November, and its perceived early success with merchants and consumers, has created a sense of urgency at Google and the telecom companies that is feeding the acquisition talks, two of the people said.
Wireless-telecom carriers already have a model for sharing revenue with Google, so teaming up again through a Softcard deal is more attractive than a PayPal acquisition, one of the people said. Google shares some of the revenue it gets from searches on Android phones and from its Play store with the wireless carriers.
Google’s original vision for Wallet included a closed-loop advertising system that would use purchases in physical stores to improve the targeting of digital ads. The plan was to share some of this ad revenue with the wireless carriers, but the companies couldn’t agree on how to do that, according to the person.
A Google acquisition of Softcard could revive these types of advertising deals and putGoogle and the telecom companies in a better position to compete with Apple Pay, the person said.
News of Google’s interest in Softcard was earlier reported by TechCrunch.
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