From Google Pay to Google Debit Card
Historically, Google has been the leading search engine for many years since being founded in 1998. Most of its revenue comes from advertising and still does, especially now with Youtube within its portfolio.
Since then, it has renamed into Alphabet as the parent company to help differentiate Google from other projects (but I’ll still be referring to Google in this article). One of the most exciting areas in which Google has been getting involved in is the fintech industry.
With Apple already being a dominant player within this space (with Apple Pay and Card), Google has also started developing its innovation.
Google has the tech to help not only process payments but also underwrite and service loans. Like some of the other tech giants, Google is in a position to grow as a fintech company, especially with some infrastructure already being set up.
With WeChat and Alipay having great success pivoting into more fintech-related functions of their business in China, Google will be focused on attempting to develop its fintech ecosystem in 2020 and beyond.
Starting with Google Pay
Google Pay (previously known as Android Pay) is a digital wallet platform developed by Google to help power in-app purchases as well as tap to pay payments. This has enabled users not only to purchase on the go but also with different types of devices such as with your watch, mobile, and tablet (although paying with your tablet would be an interesting sight!).
Some of the major selling points is the fact it has no debit card fees or bank transfers and is one of the cheapest payment systems. It also integrates into other Google Services and even with providers like Paypal.
This has been one of Google’s first successful attempts on anything related to fintech.
Google ‘Cache’ — Checking account
In November 2019, Google announced it was preparing to launch a consumer checking account in partnership with Citigroup and Standford University.
The code name ‘Cache’ was given to this project with the intention to help educate users with money guidance tips as well as fund management within these accounts. It is interesting to note that Google has a higher trust rate with consumers compared to other tech firms like Apple.
A recent McKinsey & Co. survey indicated that 58 percent of respondents said they would trust financial products from Google. That trust factor was higher than Apple and Facebook, but lower than Amazon. — Source
With Google’s data and understanding of good UX design, there is no doubt they can add value to financial institutions who have historically have bad user experience and interfaces within their applications.
Although there have since been no updates, this leads us to the next initiative that Google is undertaking.
Google Debit Card
Google has recently started developing its own physical, and virtual debit cards with the announcement revealed in April 2020. This will, of course, connect with an associated checking account (possibly with Google’s own one as mentioned previously) to help purchase goods and services with a card.
This is most likely a move against Apple’s card and payment system.
One of the most significant advantages of doing this is its ability to absorb the entire payment process within its system. Currently, when purchasing with Google Pay, you still need to link it with a traditionally issued payment card from a bank or with a service like Paypal.
By introducing its own card, it would allow for a tighter transaction process with Google owning the entire payment chain.
Historically, Google has tried to do this with Google Wallet
Google wallet was a project in 2013 where it eventually closed shop in 2016. Originally it was meant to be a universal payment card where the goal was to replace other credit and debit cards by controlling the source of funding through your Wallet app.
This was scrapped, and instead, a more watered-down version was created. The updated version required funding to go through your Google Wallet account, which meant you had to connect it to your bank account (which no-one wanted). Even more disappointing, this card was only useable within the U.S., which gave it less of a reason even to get one in the first place.
Google will have learned from the mistakes it made from this earlier project and will most likely keep it simple for consumers to not only use the card but transact.
Google is in a great position to be a fintech giant
One of the commodities that Google has that no other fintech company has is an endless amount of data provided by its search engine. This data can be used to not only accurately help manage risk but also understand consumer intentions and behaviors, especially spending habits.
These behaviors are often shifting with consumers now opening up to the idea of digital banks.
Customers are falling out of live with banks. 70% are motivated by lower costs, 68% by the ease of use offered by digital players and 54% just need a faster service to support them in the digital banking era. — Source
For now, Google is going to work with specific partnered banks for the financial infrastructure as well as regulation that banks have that it might not have. In the future, when Google feels like it’s in a viable position to pursue its own financial institution, there is no doubt they will attempt to (like what WeChat did).
Google also has its venture portfolio with other fintech companies.
On the last point, Google also has a venture capital arm that aims to provide seed, venture, and growth-stage funding to tech companies.
Google Ventures has invested in companies like Uber and DocuSign but also fintech like Ripple, Robinhood, and LedgerX.
With the knowledge learned from investing in fintech companies, there is no doubt this will be applied within Google’s own internal financial projects.
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