Yahoo Finance reports that Google Wallet is now keeping your Wallet balance in FDIC-insured bank accounts, insuring the money in the case of the company goes bankrupt.
Typical bank accounts come with FDIC insurance on balances of up to $250,000 and should the bank go under your funds are guaranteed by the US government. However, electronic wallets like Paypal, Vemno and Google Wallet are not banks and do not have FDIC insurance on the funds.
Google confirmed with Yahoo in a statement that though the current user agreement indicates that the funds are not held in FDIC-insured accounts, the policy has now changed. Wallet balances are now held in FDIC-insured accounts across various banks.
Note that Google themselves does not have FDIC insurance, rather they’re holding the money in FDIC-insured bank accounts for added protection.
Conversely, Paypal and Venmo do not share where they hold customer’s money and they make clear in the user agreement that the monies are not FDIC-insured. Paypal used to keep the funds in FDIC bank accounts until 2012 when it became more expensive for them to do so.
It’s probably better not to read too much into this move by Google, but it’s possible it indicates some movement with their Wallet, possibly working to make it more of a quasi-bank than a simple transaction-facilitator. Google is reportedly working on a bill-pay feature as part of Gmail, which may somehow connect to the Google Wallet. And they ramped up their hand in the mobile payments market by having Wallet preinstalled on Android phones.
HT: forbin4040 on Fatwallet
Related:Â Google Wallet Removes Credit Card Option
