Google entering UK P2P payments
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3 February 2015Zilvinas Bareisis
Last week Google announced that it will be rolling its email based money transfer system to the UK. The feature was launched about two years ago in the US and allowed those with a Gmail account to hover over a $ sign and add money to an email message like an attachment. It is expected that it would work similarly in the UK, with a $ sign naturally replaced by £. Why now? Why P2P, and not, for example, HCE-based NFC payments, ahead of the expected Apple Pay launch? We admit we don't have insights into Google strategies (and if we did, we couldn't blog about it), but here are some of my thoughts. P2P payments has rapidly become a competitive space in the UK. Consumers can already choose between PayPal and other "wallets" or individual bank-based initiatives, such as Barclays' PingIt and Natwest Pay Your Contacts. Also, last year, Paym, an industry-wide solution was launched in partnership with banks. Paym recently reported having signed up 1.8 million consumers who transferred £26 million. Admittedly, it's not much yet, but with some banks so far it's only possible to sign up to receive payments via Paym, but not send. While all these solutions are making more consumers more comfortable with the idea of sending money based on a mobile phone or an email address, at the same time, Google will have to differentiate to stand out from the crowd. One clear differentiator is the email-based approach. While I don't have specific numbers, my sense is that Gmail is a popular mail service in the UK, and all these customers will now be able to enjoy a new feature. Assuming they like what they see, and start sending money to each other, Google is likely to enjoy increased wallet balances, at least until the recipients are ready to cash out. I also suspect this is a customer acquisition play for Google Wallet, which has not received as much publicity in the UK as it did in the US. Every Google email user can send money, but you do need a Wallet app to accept money. Once Google Wallet establishes a customer base, it can then take on Apple Pay more directly by rolling out its full wallet services to Android users in the UK. With Android representing ~60% share of smartphone users and a growing contactless acceptance infrastructure, the UK market might prove to be an attractive opportunity for Google Wallet.