15 Oct 2012
Being the world's biggest search engine isn't enough for Google — the firm is now venturing into the business of suppplying credit cards, as well.
On Monday, Google will launch a credit card for small businesses in the U.K. If successful, the U.S. and other countries will be targeted, as well.
The new service will allow businesses to take out a loan — worth between $200 and $10, 000 — to spend on Google's money-making AdWords program, which allows advertisers to purchase text, image, and media ads, and offers pay-per-click and cost-per-thousand advertising.
Adrian Drury, principal analyst for media and broadcast at Ovum, told CNBC the move is "very smart."
The project allows Google to open up a line of credit to those AdWords buyers that are successfully using its advertising platform to drive more sales.
A large part of Google's customer base for the AdWords product consists of small and medium-sized enterprises (SMEs), and "the number one problem for SME's is cash flow, " Drury said.
The move comes after Google's year-long pilot scheme in the U.S. proved successful, and showed that offering loans pushes customers to advertise more, Google's treasurer Brent Callinicos told the Financial Times.
Google has teamed up with Barclays in the U.K. and Comenity Capital Bank
in the U.S. to issue MasterCard credit cards.
The launch challenges online retailers Amazon.com and Wal-Mart Stores, which are already making small loans to advertisers who sign up for more space, as well as major banks and credit card companies seeking to take advantage of burgeoning online commerce.
The move may come across as an ambitious step, but looking at Google's revenue gained by advertising, around $37 billion in 2011, the project is small.
According to the Financial Times, Google did not rule out plans to go further into the financial services industry
. It is looking at providing more lending products to small and medium-sized businesses that make up the bulk of its 1 million search advertising customers, the paper said.