News at Smith

UMD-Smith Experts Comment on Google Wallet Challenges, Online Sales Tax Bill Implications

May 23, 2013
World Class Faculty & Research


Media Alert May 23, 2013

Experts in the University of Maryland’s Robert H. Smith School of Business are available to separately expand on comments, below, about Google Wallet’s push for more users and implications of a possible brick-and mortar retail upswing from the Marketplace Fairness Act adopted by the U.S. Senate and under consideration in the House of Representatives.

Google Wallet Navigating NFC, Security Perception Issues

Bill Rand, assistant professor of marketing and director of Smith’s Center for Complexity in Business
Phone: 301-405-7229

"Google Wallet’s Gmail integration to accommodate money exchanges is part of a push for broader use of the app, introduced in late 2011 partially as a PayPal alternative. Google, moreover, is betting that increasing the use of Google Wallet also will increase consumer demand for other features that Google Wallet is tied to, such as NFC (near field communication), which enables smartphones to become Google Wallet payment devices.  This would subsequently draw widespread NFC adoption by merchants. Large-scale adoption by one of these groups – merchants and consumers – is needed to draw the other. Google is banking on consumers to spark the surge.

"Security concerns, especially among millennial may also have stalled NFC adoption. Many millennial have suffered from, or heard of, security-related problems associated with previous close-range technologies, such as Bluetooth. Moreover, it generally takes time for users to reach a comfort level security-wise with a new technology. We saw this play out when shoppers switched to paying for products online using credit cards. Consumers should be aware NFC was developed partially in response to security issues related to Bluetooth and the like, and its devices have to be literally centimeters apart for a potential breach.

"While Google Wallet looks for traction, PayPal's own debit card is accepted by just a few major companies, leaving it unclear which technology will win. If both advance, you could see the establishment of two electronic payment forms, similar to how MasterCard and Visa co-exist."

Online Sales Tax Implications for Shoppers, Brick and Mortar Retail, Environment 

Joseph Bailey, research associate professor of technology, management and policy
Phone: 301-405-2174

"The Marketplace Fairness Act to allow states to require retailers collect sales taxes from online purchases could lead to:

  • Fewer downloads and more packaging of digital media for more buyers driving to brick and mortar outlets 
  • Circumventive, surrogate online buyers in non-sales tax states
  • More low-price, large volume purchase opportunities in brick-and-mortar stores
  • A decline in online retail entrants and exodus of existing players

Shoppers’ Perspective

“While consumers tend to dislike any new sales tax they previously didn't pay, the effect of this proposal depends on the individual. The new tax could provide the occasional online shopper more opportunities for lower prices on volume in-store purchasing, as consumers flocking to the internet to get lower prices has limited brick-and-mortar retailers from stocking in higher volume. Heavy Internet shoppers will not be happy and may start asking their friends in Delaware and New Hampshire – states without a sales tax – to buy online for them.”

Retailer Stakes

"Clearly the Internet pure-play (single product line) retailers would have the most to lose from the burden of collecting, reporting and distributing sales tax across the many tax jurisdictions. Such added burden could lead to fewer companies entering Internet retail sales and prompt some companies to exit the market altogether.”

Systems-Environment Factor 

“A shift from online to in-store sales could impact the environment as well, such as from increased, air-polluting traffic from consumers making special trips for a product they would otherwise buy online. Perhaps the most interesting systems affect would result from a shift in digital product sales, such as ebooks and music, to brick-and-mortar stores, requiring more physical packaging and transportation expenses for stocking and distribution.”

The Smith School has an in-house facility for live or taped interviews via fiber-optic line for television or multimedia content.


About the University of Maryland's Robert H. Smith School of Business 

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, online MBA, specialty masters, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.