Google Wants to Be a Bank Now
Google, the search engine company that also happens to do 35 other things, is expanding its horizons once again with a new financial services division. On Monday, the multi-billion dollar corporation is set to launch a new credit business in the United Kingdom with plans to expand to other countries in the next few weeks, according to the Financial Times.
Based on what we know so far, the program will let businesses take out a line of credit — between $200 and $10,000 — to spend on Google’s money-making AdWords program. Google’s treasurer Brent Callinicos told the FT that businesses just “weren’t buying Adwords as much as they need to,” and a pilot program in the United States last year showed that offering loans made customers advertise more. Callinicos admitted that the company is “not doing this to lose money” and they’re also “not trying to run the financing business as a profit centre.” Starting in the U.S. and then spreading to other countries, however, Google will issue credit cards as part of the new financing program, with initial interest rates for small- to medium-sized businesses at a competitive 8.99 percent.
The move comes just a few days after news emerged that Amazon was launching its own loan business. Though details are still unconfirmed since Amazon hasn’t formally launched the program, Amazon Lending will provide capital to small business to stock up on inventory before the holiday seasons. Since Amazon takes a cut of all the sales through its website, helping small shops sell more goods makes great sense. “These spot loans will help these folks grow by getting them extra cash to buy more product,” said Scot Wingo, chief executive of e-commerce advisory firm ChannelAdvisor, told the Mercury News. “This is definitely cheaper than credit cards and faster and easier than banks, so may fill a big hole for sellers.”
Don’t expect to see Google and Amazon ATMs on the street corner any time soon, though. For now, both of the companies’ programs will focus on commercial loans. Of course, this is a company that’s already busy trading energy, rigging up high-speed WiFi in middle America, developing self-driving cars and trying to make everybody look like Star Trek characters. So who knows how far they’re willing to go.
By Adam Clark Estes, in The Atlantic Wire