Google (GOOG  ) announced an update of Google Pay which will allow users to open a bank account through its app. It's also adding payments to other users as a feature that will allow it to compete with other services like Venmo, Paypal (PYPL  ), and Square (SQ  ).

Although Google is a bit late to the digital wallet party, it's been long-rumored that Google has had an interest in buying Square (SQ  ). Digital wallets are increasingly how young people do their banking and manage their finances. The experience of fintech companies - both consumer and businesses - show that over time platforms can offer higher-value-added services and products to its customers like credit, wealth management, advisory, insurance, etc.


Google is partnering with Citi (C  ) to add mobile banking units and plans on adding new partners next year. Google is following Apple (AAPL  ) which launched a credit card in recent months and has been beefing up Apple Pay. Up to now, both companies have been focused on letting users upload their payment information into their phones and then letting users pay at stores with it. Facebook (FB  ) has also been introducing letting users make payments through Messenger and WhatsApp and is expected to augment these offerings in the coming months.

Google's checking and savings account come with some advantages including no monthly fees, overdraft charges, or minimum balance requirements. Users can also receive a physical debit card through Mastercard (MA  ). Users can also upload bills and receipts using Google Photos to help manage and track expenses.

Stock Price Impact

In the short-term, this news won't affect Google's stock price. However, in the long-run, this could be a meaningful contributor to the company's financials. Through its software and free checking accounts, Google should be able to amass deposits and users. This follows Google's path with many of its products, where it offers users a bunch of features for fees. Once, it reaches a critical mass, it can monetize its userbase and offer more higher-value services, especially as it applies machine learning to users' budgets, spending, and savings.

Over the past week, Google's stock has broken out to new highs and been consolidating. It's another winner of a vaccine. Travel and small business make up a decent chunk of its revenue base, so as these sectors return to normal in the coming months, Google should benefit.