This time round, I think that they have launched something with real potential. While the model is still extremely risky, it is worthwhile to watch. Google has effectively linked two transactions together to provide a pseudo-experience that you are paying with your own card. Google is prepared to loose money on every transaction in the process (Read here). They are probably doing this to get to the crucial purchase data. The risks is that they would loose significant money before they can show sufficient monetary value.
The other risk is that they expose the payment eco-system to liability risks. Because of the two transactions (tied together), existing dispute mechanisms will not work. Charge-back rules and other protections built into classical payment schemes are broken. This is probably why Google Payments Company (GPC) require the subscriber to hold them harmless in the Terms and Conditions ("You agree to release, GPC, .... and their agents, contractors, officers and employees, from all claims, demands and damages" (Read here))
So providing that Google can manage the significant risks and provide sufficient incentives (maybe in the form of coupons and special offers) for subscribers to use the service, this time round, the wallet may just get traction.