While “Pony Express” may sound like a potential offering from Wells Fargo (or possibly another visual to go with its iconic stage coach), it is not a creation of this bank. In fact, it is a service that Google has in the works. According to the tech news website Re/code, Google is developing this service (although it is not clear whether Pony Express will be the permanent name) to enable Gmail users to pay their bills within Gmail instead of having to go to the payee’s website or their bank’s website to complete the transactions.
This service which is scheduled to be launched in the fourth quarter could provide Google a variety of financial data that could help the company move into new businesses. For example, payment history and credit card bills could provide entry points into the personal finance and lending industries. In a recent American Banker article, payment consultant Richard Crone explained that it threatens everyone in the payment space, because bill payment is a $1.2 trillion per year industry. This makes it the second largest payment class following in-store point of sale at $6.2 trillion. Mary Monahan, executive vice president and research director for mobile at Javelin Strategy & Research, adds that “Google is trying to replace the primary bank’s central position in bill payment aggregation to eventually become the financial center of the consumer’s life.”
Google Wallet originally provided a way for Google to connect with banks by ensuring the prominence of the bank’s brand in the mobile wallet. Google’s virtual MasterCard was another way to enhance the tech company’s relationship with banks. In contrast, Pony Express seems to focus more on access than functionality, because it makes Google more visible to consumers than the banks that fund Google Wallet or Gmail transactions.
Skeptics are likely to highlight the less than positive results of past payment services. For instance, Hearst’s Manilla was a 2011 service offered to manage bill payments and magazine subscriptions that disappeared after three years, because it couldn’t scale. Merchant reactions to Google’s earlier mobile payment offerings have been mixed. Google Checkout (the predecessor to Google Wallet) raised fees in 2009 that subsequently irritated merchants who thought it was inferior to PayPal.
Although these points from skeptics have some validity, Google has a number of advantages in its pocket that bodes well for Pony Express. With more than 420 million Gmail accounts, Pony Express could grab the attention of a substantial number of online banking customers. Google has the clout to partner with another technology company that has a bill payment engine (and its own list of billers) if it is needed to make Pony Express come to fruition. Furthermore, Google just hired former Morgan Stanley executive Ruth Porat as its new CFO which brings her tech banking expertise and financial discipline to the Silicon Valley giant.
(Photo: Gmail, Flickr)