It almost had to happen: Google is getting into the consumer lending business, though only with a very specific and narrow selection of consumers.
On July 20, Google announced that, in partnership with World Financial Capital Bank, it has created a credit card for small to medium sized businesses that buy ads on Google’s AdWords network. The card can only be used to purchase AdWords campaigns.
The new Google AdWords credit card is really more of a line of credit than a credit card, since it can only be used with one merchant (Google) and to purchase one type of thing (advertising). The interest rate will be 8.99%, which is an ongoing, rather than introductory rate, and there is no annual fee. Currently, APRs on business credit cards average around 13%, while rates on personal credit cards are somewhere between 16 and 17%.
Credit limits on the AdWords card will be determined on a case-by-case basis. Like with many new Google offerings, the card is currently in its beta stage and is by invitation only.
Who could benefit from this card?
- Small businesses with seasonal cash flow who want to advertise in advance of busy seasons
- Small to medium businesses that already charge AdWords purchases to credit cards and pay higher interest rates
- Newer businesses with small budgets who find the current credit environment unwelcoming
Google’s big-ticket ad clients already have lines of credit, so they’re not included in this roll-out.
Why is Google doing this? The company makes 96% of its money from advertising, much of which comes from AdWords ads. Plus, Google is sitting on a huge pile of cash right now, and is financially more than able to do this as a way to address advertiser needs. But also, they’re facing increased competition from the search alliance between Yahoo and Microsoft as well as Facebok ads, which are rapidly increasing in popularity.
By throwing down this specialized gauntlet in front of rivals Yahoo, Microsoft, and Facebook, what might Google bring about in the near future? Perhaps a more generalized Google credit card – maybe one that could be used with Google Checkout – will show up on the horizon.
Or perhaps a Facebook-branded card for purchasing Facebook ads could become reality. Facebook already has a partnership with American Express that allows those with American Express cards to redeem rewards for Facebook ads. The fate of this new card is definitely something small business owners will want to watch.