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Why Google Wallet Needed To Release An Offline Debit Card

Last week, I wrote an article bringing attention to the Google Wallet Card. This decision to print and give away a free debit card will usher in a new epoch of payments, banking, and budgeting. But when I finished writing the story, I realized there was a missing piece to all of the current press: Why did Google release an offline debit card in the first place?

Google Wallet was announced in 2011, and released as a smartphone app in September of that year. After over two years of development and company expenditures, critics suggest the experiment has failed:

…Google Wallet is a dud, at least to date, despite the company’s expenditure of an estimated $300 million in real money on its development… (USAToday)

Earlier this year, rumors began swirling that Google would be releasing a physical debit card to be paired with its Wallet service. Unfortunately, ahead of the company’s major press event, Google I/O, they scrapped the release and went back to the drawing board. Despite being considered a “dud” by some analysts, Google Wallet was already beginning to catch on – largely credited to the payment processing of Android apps and Google Play purchases.

Google is already sucking in that purchase data on many fronts — between Google Play payments, Google Checkout on the Web and also advertiser payments — in addition to the dedicated Google Wallet project. (AllThingsD)

On November 20, 2013, Google decided to follow through with the release of a physical debit card (issued with a Mastercard logo). Commentators and speculators suggest that the Google Wallet platform needed to increase users’ payment options. As much of what we buy in stores takes a physical swipe of a card, these stories suggest that the debit card would help pay for physical goods. But tech writers have questioned Google’s decision to enter the physical world:

It’s surprising because Google exists to get people off physical media and into virtual digital everything. They’ve also been a leading force in mobile payments with both Android and Google Wallet. (ComputerWorld)

The persistence of plastic suggests we’re a lot farther than we think from a world where true mobile payments are the norm. (Washington Post)

Thus far, the primary hypothesis seems to center on the idea that Google has admitted to the failure of its online-only payment platform – it’s kowtowing to the payment processing gods and issuing a physical card. These articles and writers don’t give enough credit to this decision or Google’s business acumen. The company is in the payment processing business for the long haul. Much like their advertising platform, which is considered to be the best ad system in the world, payments give vital details about user habits, transactions, and life outside Google. There’s money in that big data and Google is about to start drilling.

With the release of a debit card, Google Wallet is not admitting defeat nor is it suggesting we have a “lot” further to go before mobile payments become the norm. Rather, the Wallet platform is injecting itself into the current psychological modality for purchasing goods for evolution down the road. Users of the product will begin to natively track and spend via the online platform. This will likely cause people to start defaulting to this payment system.

Meanwhile, Google has laid a diverse framework and future for the payment system by interlinking it with Gmail, Google+, and a growing number of online services. Now, you can send money via Gmail, swipe for gas, and receive a payment – instantly and securely. But Google needed a card to segue purchasers to this mobile platform. Eventually, when people are convinced that the online, digital model works better than physical, debit card swipes, Google will win.

Every recent service Google has announced has required a segue from the search model. From Drive to Plus to Wallet, these services have been built-in to a diverse set of products. Drive is now caked into Gmail attachments. Plus is a necessity for YouTube comments. And now, Wallet… Necessary for Google Play purchases and about to grow into another multi-billion dollar industry for Google. Making a physical card was just another segue for Google to make users’ switch to a mobile payment model more seamless.

An era of mobile payments is nearly here. In the next 4 to 5 years, we’ll likely see a massive switch to digital payments. Just like the banking industry today, there will be multiple players and competition. The major difference will be that tech behemoths will compete directly with big banks. What’s clear is that the players that can create a natural blend of on and offline payments now will win later.

A Terrific, Terrifying Article About Poverty

By Frugaling 5 Comments

Today, I happened upon a wonderful article about what poverty is like. After reading it, I knew I needed to share it with you all. Poverty, debt, and working till you drop are all terribly interlinked. The following are a few highlights:

Rest is a luxury for the rich. I get up at 6AM, go to school (I have a full courseload, but I only have to go to two in-person classes) then work, then I get the kids, then I pick up my husband, then I have half an hour to change and go to Job 2. I get home from that at around 1230AM, then I have the rest of my classes and work to tend to. I’m in bed by 3.

Nobody gives enough thought to depression. You have to understand that we know that we will never not feel tired. We will never feel hopeful. We will never get a vacation. Ever. We know that the very act of being poor guarantees that we will never not be poor.

I make a lot of poor financial decisions. None of them matter, in the long term. I will never not be poor, so what does it matter if I don’t pay a thing and a half this week instead of just one thing?

Poverty is bleak and cuts off your long-term brain.

Read the article in its entirety here (it’s worth a read): Why I make terrible decisions, or, poverty choices.

5 Problems Of Using Cash To Stay Frugal

By Frugaling 13 Comments

Something about switching to a cash only lifestyle is screwing with me. I’m less than five days into an experiment where I’ve put away all my credit and debit cards, and replaced them with the good ol’ US dollar. There are a multitude of reasons for eschewing the digital dollar: people tend to spend more with credit, tip more with a swipe, and purchase discretionary products.

Cash should be easy. I’m looking to be more frugal, and all the research suggests that cash (which is concrete) is harder to spend. Instead, I’m floundering and fishing for ways to better acquaint to cash. The reality: I’m having some trouble with the classic currency.

1. Cash Reminds Me Of High School

It’s been a long time since I touched the green paper known as cash. In fact, I haven’t really used cash since high school. I’m a Millennial with keen eye towards the digital world. I’m an avid Mint.com user and Ally Bank customer. Something about cash just doesn’t mix.

Cash is painfully slow for tracking purchases and spending habits. Whereas credit cards feed all the spending right into my Mint.com account, I have to sift through receipts and cobble together some patterns.

2. Stores Don’t Honor Cash

While every store I’ve ever been to accepts cash; in reality, they don’t honor it. What do I mean by that? Well, cash saves corporations lots of money in transactions fees associated with swipe commissions. Visa, Mastercard, Discover, and American Express all make a cozy living through transaction fees.

When you receive 1 to 2 percent cash back on some credit card, the issuer is just cutting you in on their profits. Cash consumers get the short end of the stick, though. As I carry in my awkward wad of bills, the store clerk accepts it at the same price as credit purchases. For instance, that $60 pillow at Target costs $60 in cash and $57 for someone with a RedCard (comes with a 5% discount). And even though a major corporation loses a significant amount of profits to credit card purchases, they don’t offer any incentive to use cash.

Likely, stores still benefit from tracking credit card numbers. Even though Walmart doesn’t have a store card, they track all purchases and try to predict buying behavior in its customers. If you use the same credit card, they can effectively track your every move. Again, cash consumers are punished and receive goods at a 3% premium.

3. Cash Is Cumbersome

Maybe I’m psychologically weak or overly complaining, but I hate carrying around cash. Not only is it a flight risk – anybody can walk up to you and steal your cash – but it just fills my pockets with an unnecessary jingle that reminds me of the Salvation Army working a storefront.

With credit and debit cards, my minimalistic dreams were wonderfully clear and easy. I could reach into my pocket and quickly grab what I needed it. Now, I’m sifting through bills and change – searching for the appropriate denomination. I’m clumsy.

4. I Need An ATM

It feels stupid searching for an ATM. Everywhere I go, I’m looking for one. Even though my checking account offers free ATM withdrawals anywhere in the country, I feel held back by the need to find one.

There have been a few times where I literally ran out of money, and without an ATM visit, was unable to make a purchase. Now, if this was an unnecessary, discretionary product, this would be the perfect example of cash’s frugal ability. Instead, I’m left choosing between groceries that I can or can’t buy.

5. Where’d The Time Go?

Cash transactions, ATM visits, and spending errors (at least early on) have slowed me down immensely. I feel like I’m losing time in my life by constantly dealing in cash.

Just a couple days ago I parked in a local lot. As I made my way to the exit and payment station, I had to go into a full “cashier” lane – bypassing two “credit card only” lines that were empty. The extra time seems exorbitant and useless. I find a particular frustration with the process.

Why Google Wallet Needed To Release An Offline Debit Card