Its intuitive UX, generous incentives, and localised features make it a darling app in Singapore. But as with most things, it comes with a price.
Alipay, WeChat Pay, Apple Pay, and the list goes on. In the last couple of years, businesses have been busy launching digital wallets.
Let’s look at Alipay, for instance.
Alipay has become the primary means by which Ant Group collects information on their users’ spending behaviour. Ant supplies these information to banks and insurers to churn out credit ratings, and recommend personalised financial products. Ant can take a cut out of each successful purchase.
Ah as you can see, the potential of a digital wallet goes far beyond that of a payment service.
Then there is Google Pay
Let’s talk about the Singapore version of Google Pay.
Don’t be confused. Previously, there was Android Pay. Android Pay served as a digital credit card aggregator to make payments to merchants from your Android phone. But that was about it.
Google Pay is a lot more than that.
It requires you to create a Google Pay account with your Google email. You link this account to your credit card or bank, after which you can use it to transfer money to your friends (like a bank app), and make payment to merchants (like credit card).
No people, no data
The first thing about digital wallets is membership acquisition.
This is where Google faces a slight disadvantage. Alipay has its e-commerce platform, while Grab has its ride-hailing, food delivery businesses. These primary actvities fuel the need for a wallet to accompany their service. On the other hand, Google primarily transacts with businesses for ad revenue, and they don’t need a google wallet for that.
Hence, Google Pay needed to invest in acquisition. In Singapore, it was paying S$10-$16 per new sign up, rewarding both the referrer and the referee.
In 3 months, I’ve made S$94.99 from referring friends and making transactions via Google Pay.
Think that’s a lot?
New users have to sign up for a Google account, download the Google Pay app, link their account to their bank account/credit card. After which, they need to make their first transaction. That’s a total of 4 high intertia steps before the referrer can earn the cashback.
But what an enormous difference these 4 steps make. By doing so, you are helping Google connect your virtual activities to your physical activities. More about this later.
Keeping dopamine-hungry humans satisfied
After acquiring you on their platform, it needs to keep you coming back.
This is the expertise of social media and gaming companies. What better way to incentivise people than to make use of their dopamine-starved inclinations?
Every time you make a Google Pay transaction, you get a virtual scratch card that you can scratch to reveal some money that you have earned!
It’s like a low-effort game that you don’t need to pay anything more than what you had intended to. Sweet!
The best part is that this isn’t stored in some wallet where you are forced to spend another day. Your rewards are directly credited into the bank account that you have linked Google Pay to.
Other reasons to stay
Google Pay has incorporated merchants on its app so that people can transact on it. Currently, it is offering food deliveries and booking of movie tickets on the app. Both of which have generous cashback (S$2.5 cashback when you book a movie ticket). I expect the list of merchants to increase in time to come.
In other countries, there are other value-adds such as insights on your spending pattern. Spotify has showed us that users love to look at their own data.
It’s localised
The Google Pay in Singapore well integrated with our local payment apps DBS PayLah!, and PayNow.
I am half-guessing that this is one way to win over the iOS users. Apple Pay is the default contactless payment mode on Apple devices. Hence, they can’t use Google Pay to make contactless payments with in-store merchants with their phones. The only way Apple users in Singapore can use Google Pay would be a direct debit from their bank accounts (DBS, OCBC, Standard Chartered), or via credit cards for online payments.
Finally, making money
Unlike Apple Pay, it is not charging banks nor merchants when individuals use Google Pay to transact. However, there is no guarantee that it will not start charging when it dominates the digital payment space.
But make no mistake — Google’s eyes are set on something larger than transaction fees and merchant commissions.
The bigger share of the pie lies in providing data-backed financial services.
Google has long been a dominant player in the world’s search market. It hosts several work and personal digital services. It knows your emails, calendar, and contacts. However, the potential of this rich database of personal information has not been ‘fully exploited’.
But when individuals start connecting their online accounts to their credit cards/banks, Google can clean up fake accounts, and focus on those that have been verified by these accredited financial institutions.
When individuals spend via Google Pay, Google can access their spending behaviour (where, what, when) and predict their next spending. Unlike passive search activities, these actual spending data can be sold to clients or shared with their affiliates, so the latter can promote their products to a much targeted audience. Currently, Google is able to share information with 3P merchants that we transact with, and also all affiliates under Google LLC. Check out Google Pay’s privacy notice here.
Like Ant, Google could also partner with financial institutions to offer personalised insurance and wealth banking services based on these behaviour, and earn a cut out of each transaction.
In essence, you are helping Google connect your virtual world to your physical world. And boy is this valuable.
Of course, you can opt out of providing information about your payment transactions to Google. But that will also mean that you will not receive those cashback.
I’m sorry to the friends i’ve roped in to fulfil Google’s agenda. But few can resist the temptations of cash in this tough climate.
It’s all great, but…do we need it?
I’ve talked a lot about how Google benefits from your usage of Google Pay. But let’s not forget that it takes two hands to clap.
Google Pay solves the problem of having too many debit/credit cards from different banks. Having an one-stop mobile service provides convenience for digital payment. With the experience it has in providing consumer-facing services, Google has created a brilliant app to keep users hooked.
But do we really need it?
In Singapore, the digital payments space isn’t a complete greenfield. Apple Pay has dominated the contactless mobile payment space for iOS users. GrabPay is the default wallet for Grab services, and is increasingly common in merchants where contactless payments are not available. All 3 local banks have their own version of digital wallets (DBS PayLah, OCBC Pay Anyone, UOB Mighty) to varying degrees of success. FavePay has been investing a lot into increasing its adoption rate in Singapore.
Perhaps its main value proposition here is that …
Google just does it better?
With the dinosaur pace that banks are taking in the digital space, Google’s entry has provided a superior and secure app experience that puts them to shame. And now that we are all familiar with digital payments, it is a fertile ground for Google to enter.
And so as with all of our digital participations, we need to weigh between these benefits with the possibility of sharing our personal data with Google. Just that this time, the stakes are a little higher.
Will it succeed?
Google Pay is a brilliant way for Google to enter the digital finance space, a move that is fraught with regulatory obstacles in United States. Recently, even Ant is facing some pushbacks from the once all-supportive Chinese government.
While I can’t comment on the regulatory treatment that Google will receive from Singapore, it does seem like an awkward country to launch the payment service in. On one hand, it’s a saturated space with many digital wallets vying for our attention. On the other hand, all of them aren’t super successful.
But if it does succeed in becoming our defacto digital wallet, the opportunities for ad revenue, customised product offers and data infringement, are indeed endless.
