Google may be attempting to displace existing mobile banking solutions by absorbing them into the Google Pay app, but the strategy hasn’t been made clear. According to an article in the New York Times:
“Google plans to add checking accounts from Citigroup and a credit union to its Google Pay digital wallet in 2020, the tech company said Wednesday.
Google confirmed an earlier report by The Wall Street Journal.
Big tech companies have been pushing into other arenas such as finance and health care to gain more access to consumer data. Google launched Google Wallet in 2011, now called Google Pay, which lets users store credit and debit card information and use them to make mobile and digital payments.
Now the Mountain View, California-based tech giant wants to add checking accounts.
“We’re exploring how we can partner with banks and credit unions in the U.S. to offer smart checking accounts through Google Pay,” the company said in a statement.”
On the one hand this article suggests that Google intends to offer checking accounts. On the other hand, the direct quote indicates that Google is simply trying to integrate additional banking mobile app features into Google Pay, which would leave the actual funds and accounts in the hands of the customers’ existing regulated institution.
Such an approach has been tried before. Apple refused to provide banks direct access to the NFC element, instead forcing them to use Apple Pay. This created a very confusing mobile app environment for FIs. Since the FIs’ own mobile payment apps couldn’t be delivered on Apple devices, most (but not all) mobile banking apps leveraged the pay wallets provided by the manufacturers.
Apple thought FIs would develop mobile banking apps that were tightly integrated to Apple Pay, but that didn’t happen. Now apparently Google also wants FIs to tightly integrate their mobile banking capabilities into Google Pay.
It’s unclear what capabilities Google is targeting; will it include bill pay and mobile deposit or only be extensions that better match a payment transaction to its doppelganger that shows up a day later in the checking account?
The early release of this strategy is similar to the boondoggle created by Facebook with the Libra. FIs are easily spooked and for good reason. They have regulators breathing down their necks and are scrutinized by politicians, none of whom are currently fans of Google’s business practices.
Google should have included a detailed implementation plan, one that was vetted in advance by regulators and banks—two segments that know how to keep a secret (witness the silence in advance of Apple Pay!). Now, regardless of how dangerous or innocuous this Google solution turns out to be, this ill-considered release of incomplete information may kill the project off.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group