Google is in overlord mode again, here's why

Google is launching its own payments and money management services. An upgraded Google Play which, frankly, scares me a little.

What's new

Who uses Google Pay as a main payment mean? No one. It's more a service that you use on the Google Play store or maybe if you forgot your wallet at home and need to pay with your phone. I personally do not use it as an everyday tool and have never seen anyone doing so. And you thought that Google would leave this here? Since when is the giant satisfied with the 5th spot?

Google Pay was launched around 5 years ago, and succeeded in acquiring a decent number of users, around 150 million to be exact, dispatched in around 30 countries. Now, they are offering a new version of their app, already available in the US.

The brand-new app

The app is fairly simple and is divided in three tabs, which I will gladly explain to you. Hold on to your metro, train, office chair, couch, because it might get a little scary.

Tab #1: Insights. I will start with the craziest of them all because I am too excited and scared at the same time. The "insights" tab lets you connect ALL of your bank accounts to your Google Pay account. This way, Google – hum, I mean, you – can have an overview over all of your wealth and spending. What's more, Google also looks at your emails and Google photos, so that it can scan all of the receipts which you received or uploaded a picture of. Then, with the help of magic (aka, Machine learning) it will give you data about your spending habits, which area of your budget requires attention, what financial mistakes you could avoid, etc. This is not weird at all and totally fine – is it?.

Tab #2: Pay. This is simple enough. This tab offers the classic tap-to-pay, a peer-to-peer payment system – so you can send those 7 dollars to your cheap friend Rachel –, as well as the classic transaction history. Apparently, Google promises not to share your data with others, nor use it for their own ad targeting. Moreover, there is also a feature to share bills and have shared accounts for paying stuff – kind of like Tricount or Splitwise.

Tab #3: Explore. Those are the deals. And get ready because this is a decent level of stalking. Google will offer you deals based on your preferences (that is, if you allow Pay to analyse your transactions). Google will be able to offer you suggestions based on what you bought, where you were, what you looked for online, etc. For example, Google will know that you like Burger King a little too much – quarantine and all, do not feel bad. It will therefore hit you up with specific offers that might interest you: what about a 30% for your next guilty craving?

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It looks very handy to have an overview over all your spending. Having a way to see everything, being able to budget accordingly: great financial tool. However, the price you have to pay seems to be your privacy, which you can wave goodbye to.

One last detail: Google also said it will partner with different banks to offer online checking and savings accounts (11 of them to be exact, such as Citi) in 2021. These mobile bank account will have no monthly fees, overdraft charges or minimum balances and will be called “Plex”.

All of this combined, adding the network effect of the peer to peer payment system and the bill sharing tool, they are betting on a growth never seen in the payments industry.

Google already knows where you go with Maps, what type of content you consume with its search bar or on YouTube; what about knowing all about your spendings? Sure, they do give you the choice to opt out, but bear in mind that most customers will not know what they signed for.

Why have everything on one single platform

If we look at it closely, we can see that there is a common scheme that fintech companies tend to follow. They usually start their operations with one simple offer with a high perceived value, such as peer-to-peer payments.

Not only this is cheaper to build and manage, but they also count on it to build a large customer base. Once the customer base is there and solid, it is time to roll out new services and tie them to the company.

Here are some examples:

Revolut: digital banking; now offers trading
Venmo: peer-to-peer; now offers a debit card
Cash App from Square: peer to peer; now offer investing
Robinhood: started with brokerage; now offers Cash management solutions
Betterment: started with a robo-advisor tool; now offer cash management solutions too

And so on and so forth, I'm sure you get the picture. In the end, the common goal of all these apps seems to be the same: One single app to rule them all, and in the darkness, bind them – stole this joke from a Snacks Daily podcast, please forgive me.

The takeaway

Google is stepping right in the fintech industry with its big boots. It will offer Peer-to-peer payments (like Square and Venmo), insights about your spendings (like Mint), checking and saving accounts (like... well, banks), split payment solutions for groups (hello Splitwise and Tricount) and last but not least, coupon for you to buy more (according to your secret hunches and habits of course). Oh and, of course, most of it is free, but by now, you should know that google barely makes any money through channels that require a direct transfer of money from you to them. That would be so 20^th century.

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