San Francisco — The eCommerce business is at stake — A newcomer on the block is ought to conquer it soon! Reports are swirling around that global search engine leader Google Inc., is now jumping into the vendor financing arena and revealed overnight that it will begin offering a Google AdWords Business MasterCard to selected customers in the United States to try and drum up business as competition in the online ad market heats up.
The card will a comparatively low interest rates (8.99%) and no annual fee, according to what Google is describing as an “ample” credit limit. But there is a catch — customers will only be able to use their credit line to buy AdWord products from the search giant.
An exclusive Reuters report suggests that the new AdWords credit card “marks Google’s first foray into the world of vendor financing.” This is a move that designates the search giant in the ranks of companies such as IBM corp. as well as consumer-oriented companies such as Amazon and Macy’s who offer cards to track spending habits and build loyalty.
Google described the idea behind the card is to support SMEs with funding to embark on large ad campaigns around important selling periods. Claire
Johnson, vice president of global online sales at Google, told Reuters that this could include Valentine’s Day or Halloween in the US.
“They are resource-constrained and they are generally cashflow-strapped. Many of them are trying to grow a business without the kind of means that, say, your classic company has,” she said.
So who is likely to use a Google card? Ninety-seven per cent of Google’s revenue comes from advertising and, the AdWords credit cards are MasterCards being provided by the World Financial Capital Bank. It is rumored that credit line will be attractive with no annual fee, but details are being kept under wraps about the specifics of available credit lines or how many cards will be offered in total. Credit cards will initially be available as a “beta test” and will be sent out soon to select customers.
“We are beta testing the AdWords Business credit card with a small group of our U.S.-based advertisers,” a Google spokeperson said via email. “AdWords is a tremendous source of growth for small businesses, so we think it makes sense to give them a more attractive way to pay for AdWords.”
Moreover, AdWords already accepts plastic–as with its major rivals for SMB budgets, a credit card is really the only tool an advertiser needs to kick off a self-service campaign. The difference here, of course, is that Google itself is getting into the lending business. The fact that the AdWords card can’t be used for anything but ad buys makes it something of a 21st-century version of the age-old department store card.
Google’s treasurer, Brent Callinicos, mentioned that availability for the card will reorient smaller businesses, although the beta test will try to “assess customers’ creditworthiness through a combination of internal efforts and with the help of a financial partner, it will also add some larger businesses as well to see how having the card impacts ‘historically monthly spends’.”
Exactly how much credit will be available in total is still vague, although Google has $US39.1 billion in cash and marketable securities, and plenty of firepower to create a product that combines elements of a loyalty program and a banking product.
“It is not a financial engineering project that we came up with and said this would be cool to do. It is a customer need,” Callinicos said.