Google Wallet has Venmo (and Square Cash and maybe Facebook and Snapchat) in its crosshairs with its latest app update, the ability to have person to person transfers go directly to a user’s bank account. But is the competition for share or for users who don’t yet have a P2P app? One analyst says attracting new customers for Android Phones and Android Pay is the goal.
The P2P game is played best with less friction and more speed and Google wants more people to play it with Wallet, then try transacting with Android Pay, says Gil Luria, head of technology research at Wedbush Securities.
Luria says now that Google Wallet is focused on P2P, which is mostly a free service, it wants to guide folks to Android Pay, for transactions it can make money from. Google Wallet users can still keep money in the app if they choose.
“By expanding the functionality of Google Wallet, Google is trying to get new customers for its Android phones and Android Pay,” says Luria. “Person to person payment is at once a competitive marketplace but on the other hand it’s not really a market in that it doesn’t generate any revenue. This is about customer acquisition. That’s how PayPal has always seen it. PayPal started acquiring customers 18 years ago by allowing them to send each other money and to this day they operate Venmo, the most popular person to person app, but they don’t charge customers for it in most instances.”
The end game is to get people to use the Google-owned feature that consumers use to pay for merchandise in-store.
“(P2P) really is just a customer acquisition tool and that’s how Google sees it as well,” Luria says. “Google would like to get customers to use its platform and especially to see Android Pay as a place to interact and transact through. So they kept the Google Wallet in order to have payment to payment service feeding customers to Android Pay just as Venmo feeds customers to PayPal. Making it a little more streamlined with this instant deposit is a step to making Google Wallet a little more compelling in acquiring customers to the platform.”