NEWS
NEWS
NEWS
Google Wallet now insures customer funds with FDIC insurance
Google Inc.’s mobile payment solution Google Wallet has just become safer for users in the United States with news that it now comes with Government insurance.
According to an exclusive report from Yahoo Finance, Federal Deposit Insurance Corporation (FDIC) coverage will be available to funds held by Google in Google Wallet on behalf its customers. The FDIC insures deposits up to $250,000 in the event the financial institution was to collapse.
Traditionally the coverage was only extended to banking institutions, but those in what the report “non-banking institutions,” including providers such as payday lenders and prepaid debit card are not legally required to be federally insured.
Oddly (or perhaps cleverly) though, Google hasn’t obtained the insurance directly with the FDIC and has instead said that it was going to place Google Wallet funds in various banks that are themselves FDIC-insured, providing FDIC coverage via proxy if you like.
A minor selling point
The advantage of this type of coverage is only as a selling point or point of differentiation from one service to another.
Google isn’t at risk of going to go broke, nor is it likely to run off with its customer funds at any time in the future, so having the insurance is moot.
Smaller providers, however, don’t offer this level of security and coverage, and with startups coming and going regularly it does make Google Wallet sound like the safer bet.
Of note also: Paypal doesn’t offer FDIC insurance, although like Google they’re unlikely to be running off with customer funds.
A PayPal spokesman told Yahoo
While it is true that PayPal balances are not FDIC-insured, it’s important to note that this insurance is intended to insure the savings in people’s bank accounts. Our customers do not use PayPal in this way.
…which is a good point: it’s not as though many would use services like PayPal or Google Wallet like they would a savings account.
Google Wallet’s terms of service has yet to be updated to reflect the introduction of FDIC insurance coverage.
photo credit: A gift? Pour moi? How thoughtful… via photopin (license)
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