Google’s SME finance push

We’ve often speculated at SmartCompany about the possibility that tech giant Apple could enter the world of banking.

After all, it’s only been a few months since Steve Jobs revealed the company has more than 200 million credit card numbers on file, creating a brilliant platform for a potential personal finance play.

However, today we learn that Apple has been beaten to the finance punch by one of its greatest tech rivals in Google, which has unveiled a finance product aimed squarely at the SME market.

Google announced overnight that it will begin offering a Google AdWords Business MasterCard to selected customers in the United States in a test run for what is expected to eventually morph into a larger program.

The card has a relatively low interest rates (8.99%), no annual fee and what Google is describing as an “ample” credit limit.

But there is a catch – the card can only be used to buy AdWord products from the search giant.

Google says the idea behind the card is to provide SMEs with funding to undertake 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 often cashflow-strapped. Many of them are trying to grow a business without the kind of means that, say, your classic company has,” she said.

Google’s treasurer, Brent Callinicos, says availability for the card will skew towards smaller businesses, although the beta rollout will try to include some larger businesses to see how having the card impacts “historically monthly spends”.

Exactly how much credit will be available in total isn’t clear, 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 isn’t a financial engineering project that we came up with and said this would be cool to do. It’s a customer need,” Callinicos said.

Given this is a beta program, we’re still some way off knowing if such a program could eventually make its way to Australia.

But it’s a fascinating concept which underlines how important (or perhaps reliant is a better word) businesses have become on Google.

Many web-based businesses live or die by the success of the Google AdWords efforts, so the ability to ramp these efforts up with funding provided by the search giant itself will be attractive.

And for Google, the idea of essentially locking SMEs into Google at a time when Facebook and to a lesser extent Bing are rapidly growing advertising revenue is extremely attractive.

It’s not quite the Bank of Google, but it’s a little step down this path.