The Mountain View, California-based company has partnered with Citi and the Stanford Federal Credit Union to launch mobile banking accounts and announced plans to add eleven new partner institutions next year. Google Pay will also allow users to send peer-to-peer payments – a feature that has made PayPal the household names of the Venmo app and Square’s Cash as people transition to digital payments during the pandemic.
“With our banking partners, we were looking to make banking services more relevant to the first mobile generation,” Caesar Sengupta, chief payments officer at Google, told CNBC in a video interview. “It will help our partners to make banking more accessible to this generation, and not only to make it more relevant, but also to make it more fun. ”
Google’s announcement is the latest move in finance by Big Tech. Rival Apple launched its iPhone integrated credit card last year with Goldman Sachs. Facebook allows users to make payments through Messenger in certain markets. Chinese conglomerates Alibaba and Tencent have become payment and investment giants through their mobile payment apps.
According to companies, Google’s so-called “Plex” checking and savings accounts do not have monthly fees, overdraft fees, or minimum balances. Users can also apply for a physical debit card, which will work on the Mastercard network. The Wall Street Journal reported that the partnership was ongoing last year.
The new version of Google Pay looks and borrows some functionality from other popular Google products, according to Sengupta. Users can link Google photos to search for receipts and link Gmail to view bills and money management subscriptions. It shows spending summaries and trends over time. Users also receive rewards and offers based on their transaction information.
Gen Z banking services
A potential risk for banks is that tech companies will own the customer relationship and branding of these deals, keeping a lucrative share of the deal. Still, Citi’s Selva said customers know Citi is the one who holds the deposits.
“The account is a Citi product, but customers get the best of both worlds with the Google ecosystem,” he said. “The traditional banking model is changing,” and Selva said partnerships are becoming a key part of the industry’s future.
The new line of business comes as Google and other tech companies come under fire for their main profit drivers: advertising. In October, the Justice Department filed a lawsuit against Google alleging that the company illegally maintained a search monopoly by cutting off rivals. A report by a congressional committee also alleged that Google was using data collected from its Android operating system and Chrome browser for use in its other areas of business.
Google has stated that it will use certain data about the payment product, which it says is required by most mobile payment providers to provide this service. For example, Google uses personal information to set up and manage a Google Pay account. Certain information is also required by regulators to protect against fraud and money laundering.
“Google Pay will never sell your data to third parties or share your transaction history with the rest of Google to target ads,” the company said.