Funds stored in Google Wallet accounts just became much safer as they will now be FDIC-insured, as reported by Yahoo Finance. FDIC, or Federal Deposit Insurance Corporation, protects funds held by banks up to $250,000. FDIC insurance is highly beneficial in cases such as payment systems failing, where at least the money can be saved. Moreover, this helps in gaining further trust from target consumers. For Google Wallet users, the funds that are left in the “Wallet Balance” are now FDIC insured.
Earlier, the issue had been that non-banking institutions like Google Wallet weren’t legally required to be insured. Other mobile wallet apps such as Venmo and PayPal still are not FDIC insured. The logic behind FDIC insurance, simply put, is that as long as the funds being transmitted are tied to a bank account, they will be protected. If the mobile wallet service simply allows money transfer then there is no need for FDIC insurance as the money is floating. The “Wallet Balance” in Google Wallet is stored funds, hence it fulfills the criteria.
The new FDIC advantage will enable Google Wallet to portray itself as a bank account for storing funds. This could remodel the perception of Google Wallet in the market, as it has gained much traction in the past years. Google Wallet could become your mobile only bank in the near future, similar to Simple.
There have been rumors that Google is also in talks with Visa and MasterCard for possible partnerships. Speculations are ripe that Google will partner with banks and retailers, similar to what is being done by Apple Pay, using tactics such as increased share of profits. The new Google Wallet may even be more than just a “tap-and-pay” app. We should expect an overhaul of the payments platform based around Google Wallet. We are already seeing some evidence of transformation in the current Google Wallet implementation. Recently, Google launched P2P money transfer for Gmail users in the U.K., which is powered by Google Wallet.