Recently I came across news stories covering Google’s plan to launch a Debit Card. It all started with this TechCrunch article comparing this move with Apple Card launch. First of all, to me that is not a fair comparison to begin with because Credit and Debit card are two fundamentally different products at their core. If you keenly analyse the brand positioning of Apple vs Android, you would realize that these offerings are very much in-sync with that. This also reflects the markets where each of them are dominant players. While Apple’s dominance is in markets where credit is primary mode of transaction, however Android is leader in markets with savings account as primary source of funds for day today expenses. All those jokes about one needing credit to buy an iPhone are based on some truth.
As the TechCrunch article also pointed out, it is not Google’s first attempt at launching a card, they tried it when they launched Google Wallet in 2012. (I keenly followed that project, because I was in process of building my own wallet before Google announced their pilot. This is story for another time though.) While there were many aspects of Google Wallet that I found fascinating, I was skeptical about the debit card bit because of the entire on-boarding experience. I had seen journey of multiple debit card variants physical, virtual, mobile launched by HDFC Bank to make that prediction.
Now however the times have changed. First of all, now Google has experienced massive success in India under UPI product, which inherently accesses the funds from CASA accounts only. This must have given massive confidence boost to Google Pay team to make another attempt at launching an instrument accessing funds from CASA accounts. Since UPI is as of now an India specific phenomenon, Google is trying to rely on Debit Card variant one more time, now riding on the newfound confidence. What will be the on-boarding experience is not yet known, but if they can use the learning from earlier experience, they might be able to do it better. We managed to issue a very efficient mobile variant of debit card in 2006-07, as part of m-Chek project I did for HDFC Bank in partnership with then m-Chek and Airtel. It was for not so smart phones popular back then, now the world has moved much ahead in technology adoption.
Why Google would want to do this? My answer to this question is still the same as it was in 2013. Google’s primary source of revenue is ads. Currently Google can very efficiently track the efficiency of their ads right up to the point of click, however it is not so efficient when it comes to tracking the last mile of purchase. Being able to know the effectiveness of their ads right up to the point of purchase is equivalent of digital gold for Google, a company that has built the biggest empire on user data.
This data will be the key to unlocking an effective way for selling Financial Products like Insurance, Investment Products etc, which are essentially push products and no digital company has so far been able to crack the code for selling such push products (I was planning to go on this journey but then fate had other plans for me). If Google can crack this piece of the puzzle with access to this additional data, it will completely revolutionize the way products are sold digitally and I am not talking about Financial products only here.
In addition to above it would be very easy for Google to push transactions happening with-in their ecosystem on these cards. This is what the partnering banks gain, an easy distribution channel and almost certain activation, with massive transaction value flowing through these cards.
In summary, if done right, I believe it is going to be a game-changing move completely different from Apple Pay’s journey. This not only has the potential to impact Fintech world in a big way but also how entire digital commerce is done today.
PS: This also has the potential to make Google first truly effective neo-bank for retail customers, however I am not sure if Google would have those aspirations.
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