Google Could Buy Softcard, Pairing Up With The Largest U.S. Wireless Carriers

Google Inc (NASDAQ: GOOG) is engaged in exclusive negotiations to acquire Softcard -- a mobile payments platform jointly owned by AT&T, Verizon and T-Mobile -- for at least $50 million, according to The Wall Street Journal.

The move seeks to help Google better compete with Apple Inc.'s (NASDAQ: AAPL) Apple Pay, as Google Wallet continues to struggle for adoption. Keefe, Bruyette & Woods weighed in on the matter Tuesday morning and below are some highlights from their comments.

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"While Google was one of the early pioneers in the mobile payments space with a fully functioning payments ecosystem, it faced considerable road blocks such as carrier boycotts (due to the telcos monetary interests in Softcard) and lack of merchant acceptance and issuer engagement, which resulted in limited consumer traction. A purchase of Softcard would allow Google access to a handset market previously closed off to its legacy Google Wallet product and would also enable the company to continue some of the progress Softcard has had with engaging issuers and merchants (though engagement from this end is more muted relative to Apple Pay)," the report explained.

While Softcard would provide Google with access to higher technology in the payments space, allowing it to ultimately compete with Apple Pay, as mobile payments continue to advance, "there still remains a fair amount of work to be done with Softcard to bring it to a competitive level."