(Bloomberg) -- Alphabet Inc. unveiled its long-anticipated expansion of Google Pay, partnering with banks and retailers to offer consumers new forms of bank accounts, cards and discounts.
The upgraded payment system marks the tech giant’s deepest foray yet into the U.S. financial system -- just as the pandemic speeds up the shift away from cash and as authorities raise concerns about Chinese super-apps such as Alipay and WeChat. But rather than directly challenge the industry, Google Pay will help users open accounts at partner banks including Citigroup Inc., which promptly launched a wait list for an account tailored to the new ecosystem.
“We’re working very closely with the financial industry,” said Caesar Sengupta, vice president of the payments business at Google. “We want to make sure we’re meeting all the standards that regulators and others have set.”
It’s the latest attempt by a Silicon Valley juggernaut to intertwine itself in the vast cash flows and valuable data generated by everyday commerce. But it also underscores the willingness of entrenched financial players to partner up on new ventures to avoid getting shut out.
Since its debut in 2015, Google Pay has amassed 150 million users in 30 countries with people mostly relying on the service to send money to friends or for online shopping. The question is whether it can become their primary medium of commerce. That goal has so far proved elusive for rivals such as Apple Inc., which rolled out a payments system and a credit card, and Facebook Inc., which proposed a digital currency.
Google Pay users will be able to use the app to apply for so-called Plex checking and savings accounts from 11 banks. Consumers can also link up many of their existing bank accounts and credit cards. And when setting out to shop or dine, they’ll be able to search for discounts from stores and restaurants.
That, in turn, will give Google its deepest look yet at consumers’ finances, valuable data that banks have long held on to tightly. Google said it will offer customers insights on how they spend and save money.
Bankers have long feared that U.S. tech giants would one day seek to emulate digital-payment systems in Asia, where apps have begun supplanting cash and credit cards. And when Google’s intent to offer some sort of checking account with Citigroup emerged more than a year ago, it sent ripples across the financial industry. Now banks may breathe a sigh of relief.
“This collaboration gives us a platform to drive significant scale in our retail bank,” Jane Fraser, Citigroup’s consumer-banking chief, said in a statement. She’s set to become the lender’s chief executive officer next year. With Google, she said, “we can deepen our existing relationships and serve an exponentially larger and new generation of customers.”
The New York-based bank’s Plex customers will still have access to its 60,000 fee-free ATMs. There won’t be any minimum-balance requirements and customers won’t be charged monthly account fees.
Google’s push will have to thread mounting concerns about its expansive collection of online information and clout in advertising and commerce. It’s already facing regulatory scrutiny under laws in Europe and California that restrict digital data collection and use.
Sengupta said the company prioritized privacy and security with the revamped app. For instance, some new features, like the ability to automatically import receipts from Gmail and Google Photos, are turned off at the onset. And personal data from the app won’t be sold to third parties or used to improve Google’s ads business, he said.
“When it comes to money, security and privacy are absolutely paramount,” Sengupta said. “We tried to use as simple language as possible to help the user understand what trade-offs they have to make.”
The company, which is currently under investigation in the U.S. for antitrust violations, didn’t see the updates as harming competition in the financial-services market.
“It’s not really a new market for us,” Sengupta said. “Our belief is that if we can help users save a little bit of money or get a little bit of control over their financial life, it will add value.”
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