Send Money With Gmail

Google Wallet Takes On Paypal

Google Wallet, the search king’s mobile payment system, announced an exciting new feature at its geekfest, Google I/O, in mid-May. Wallet users will soon be able to send money instantly to friends, family, and any other Wallet users via Gmail.

This is bad news for Paypal, the eBay subsidiary that does exactly the same thing. It may be good news for Paypal users fed up with the company’s fees and increasingly restrictive terms of service. But Google Wallet is not without its shortcomings compared to Paypal. Here's my take on the pros and cons of each.

Google Wallet lets users tap more types of payment instruments than Paypal. In addition to checking accounts, credit cards and debit cards, Wallet users can pay using gift cards, loyalty rewards accounts, and promotional discount codes. Payment instruments can be added to Google Wallet manually by users or automatically by vendors of the payment instruments.

The Wallet feature in Gmail works much like sending and receiving attachments. To send money, look for the $ icon in your attachment options. Gmail will prompt you for the amount and the funding source, and off it goes. You can even send to recipients who don't have Gmail, but both parties will need a Google Wallet account. The money send/receive feature will be rolled out to Gmail users in the U.S. over the next several months. If you can't wait, find someone who already has the feature and convince them to send you money. You'll get access in order to receive the funds.

What Does it Cost to Send Money?

There is no charge to send money from your Google Wallet balance, or from a bank account linked to your Wallet account. Sending money with your credit or debit card will cost 2.9% per transaction, but receiving money is always free.

Paypal also allows for no-fee money transfers, when using a Paypal balance or linked bank account, but only between "friends and family". Paypal is the final arbiter of who gets to be your friend or family member. If it appears you're sending or receiving payments in a business context, fees will apply. Like Google, Paypal charges 2.9% when you use plastic, but they also impose a 30 cent per-transaction fee. Unique to Paypal is the fact that users can choose whether the sender or receiver pays the 2.9% fee.

Plenty of Competition

On the downside, Google Wallet cannot be used in as many locations and environments as Paypal. Wallet is only available on certain Android smartphones and tablets, and not on any phones sold outside of the U.S. The new Google Mail option will work only on desktop PCs, not mobile devices. Merchants can offer Google Wallet payment only in stores equipped with Mastercard PayPass terminals (about 300,000 locations), or on the mobile versions of their Web stores. Even worse, online shopping with Google Wallet has been blocked by the biggest U.S. mobile carriers.

Only Sprint allows on its network apps that access the Secure Element hardware chip that must be embedded in a phone in order for Google Wallet to work. You can buy phones that include Secure Element from AT&T, Verizon, and T-mobile, but you won’t be able to access Google Wallet through those carriers. The likely explanation for blocking Google Wallet is that these three carriers are working on their own mobile payment system called ISIS, which won’t be rolled out before 2014.

Visa PayWave is another mobile payment platform licensed by Google. It’s similar to Mastercard PayPass’ system of apps and terminals. But PayWave is in limbo for now; Visa, phone makers, and carriers won’t say when it will be implemented.

The Gmail option will make Google Wallet available to more users, increasing its brand awareness. But it’s not intended to be a new market. Perhaps the biggest disappointment is Google’s announcement that there will not be a Google Wallet debit card similar to the Paypal Mastercard. Some people use their Paypal card heavily; it works with PIN or signature (debit or “credit” mode), and pays better rebates on signature purchases than most banks’ cards. Maybe if Google could find a way to display ads on a credit card...

Google Wallet may show up on Web stores using the Gmail option for payments. But unlike Paypal, which heavily supports developers of e-commerce systems, for now, Google seems to be content to let this option remain an informal means of swapping a few dollars with friends and family.

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