Google Wallet is a great idea - in theory. In practice? The service has been plagued with problems; slow adoption, a lack of NFC devices, the existence of ISIS generally, and a public image crisis after security concerns. The biggest problem, though, has been the decided unwillingness of carriers (except Sprint) to support it.

That's because everyone but Sprint is banking on Isis, which has over $100 million in financial backing from the likes of Verizon, AT&T, and T-Mobile. Isis, if you're not familiar with it, is pretty much Google Wallet sans the whole Google part. But unlike Isis, Google Wallet doesn't provide any financial incentive for network operators. It doesn't take an M.B.A. to see how that strategy is working out for them - the Nexus S 4G and GSM Galaxy Nexus remain the only officially supported Google Wallet handsets.

While money is the root of all evil, a descriptor Google tends to avoid, there's no denying it's also world's most effective lubricant. A report from Bloomberg today claims that Google has had a change of heart, and now is open to negotiating revenue sharing agreements with the likes of Verizon, AT&T, and T-Mobile (and presumably other carriers) on Wallet transactions. Why? The same report claims Wallet adoption has been much slower than anticipated. Really? Google is surprised their only-works-on-one-subsidized-phone-in-the-whole-country mobile payment system isn't gaining traction?

The exact mechanism by which revenue will be shared is apparently not on a per-transaction basis, but rather a commission on users' purchases of Google Offers or use of particular discounts provided by Wallet.

Bloomberg also discusses the fact that Google is considering options to "sidestep" carriers, meaning that the deeper hardware-level integration required for Google Wallet to function and authenticate payments may become optional, instead utilizing Google's own backend systems to authenticate the transaction. Unfortunately, it's fairly apparent that the author discussing this has little idea how Google Wallet works on a technical level, so it's more confusing than anything when they discuss this. It's unclear how Google Wallet would function without hardware-level NFC access without developing an entirely new method of communicating payment credentials.

It is mentioned that the terminals would require hardware or software modification for the "work around" - so it's possible Google is considering a sort of "Wallet Lite" that merely transmits your Google Account information to a payment terminal, which then asks for your Wallet credentials, and then processes the transaction on the terminal. I'm sure VISA loves the sound of that idea, considering Wallet has been pretty buddy-buddy with MasterCard since its launch (though Visa support is supposedly coming).

But at this point, it may be too late for Wallet. Given its very public flogging over the PIN security debacle (justified or not), carrier collusion to avoid its adoption, as well as the efforts of PayPal and VISA to develop their own mobile payment solutions, Google's chance at getting an early foothold in the market seems to have passed. Even with a promise to work with carriers, Wallet has an uphill battle ahead of it, and if we learned anything from Google Checkout, it's that El Goog doesn't have a great history convincing merchants (or consumers) that it should be handling their money.

Bloomberg