Whelp, we all knew this was coming. Alphabet (a.k.a. Google) announced yesterday that consumers will soon be able to include a Google sponsored bank account to their Google wallet. As I understand it, now a consumer who gets a Google backed bank account can make payments and do mobile banking from the same app. If you have one-half hour to kill you can even watch their announcement video here.
To be clear, Google is not really acting as a bank in this situation. Rather, they are originally partnering with Citi and Stanford Federal Credit Union to offer bank accounts that will operate within the Google wallet. There are plans to extent the partnerships out to nine other banks. Google doesn’t currently have the necessary banking charters and other necessary government approvals to operate as its own bank and therefore has to partner with existing banks.
According to an article in MarketWatch:
The announcement came as part of a broader list of upgrades to the Google Pay wallet, including a way to see transactions in a “conversational view” that shows payments to a group of friends or to a given retailer in separate screens. The company will also let Google Pay users obtain and view rewards from retailers such as Target Corp. and Warby Parker within the app, and it will allow people who’ve linked their bank accounts to the platform to track spending by categories, including granular breakdowns, like transactions made at Mexican restaurants.
Say what you will about this announcement, but this is a serious move by Google to move their wallet or “Pay” app to more than a smartphone based payment card. Moving beyond the pay aspect of digital wallets is the Holy Grail for the tech companies like Google and Apple.
Another article I read in GSMARENA pointed out that this isn’t the first time Google has tried to realize this dream.
Google has already had a debit card in the past. The Google Wallet Card was a MasterCard debit account that pulled funds directly from a Google Wallet balance or from a saved payment method. Back then, the idea of the Google Wallet card more closely rivaled the PayPal debit card, but it was eventually discontinued after a few short years.
Given Google’s resources, data, and infrastructure, we have no doubts it can pull off launching a ‘Google Bank’ of sorts. But Google is also known for launching convenient services and then pulling the rug after it doesn’t go the way it panned out.
Both Google and Apple have their sights set on their own banking capabilities. Facebook and other “big tech” companies have been sniffing around this industry too. I’m not sure how this will al pan out, particularly in the light of growing noises coming from the government and consumer advocacy groups about breaking up big tech. I do know, however, it is going to be an interesting topic to keep our eyes on.
Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group
