Google Pay to offer checking accounts through Citi, Stanford Federal
By Paresh Dave and Munsif Vengattil SAN FRANCISCO (Reuters) - Alphabet Inc's Google said on Wednesday it will offer personal checking accounts next year through its Google Pay app, initially in partnership with Citigroup Inc and a small credit union at Stanford University. The project, codenamed Cache, comes as rivals Facebook Inc and Apple Inc are expanding their own efforts in consumer finance, a broad area that ranges from digital payment apps to bank accounts, brokerage accounts and loans, and which offer Silicon Valley new sources of revenue and new opportunities to strengthen ties with users
By Paresh Dave and Munsif Vengattil
SAN FRANCISCO (Reuters) - Alphabet Inc's
The project, codenamed Cache, comes as rivals Facebook Inc
U.S. regulators and lawmakers have expressed concern about how those companies' massive influence and poor records on data privacy will play out as they try to gain ground in finance. The scrutiny most recently prompted Facebook's partners to pull back from plans to support the launch of a digital currency.
Google said it has held initial talks with regulators, though it declined to specify which ones, about compliance issues related to the new checking accounts.
Asked about Google's plans, U.S. Senator Mark Warner, a Democrat on the Senate panel that oversees banking, expressed reservations.
"There ought to be very strict scrutiny," Warner told CNBC about tech giants such as Facebook or Google entering new fields before rules governing them were in place.
Google spokesman Craig Ewer said the company's lead partners were Citi and Stanford Federal Credit Union and that more details would be known within months.
"We’re exploring how we can partner with banks and credit unions in the U.S. to offer smart checking accounts through Google Pay, helping their customers benefit from useful insights and budgeting tools, while keeping their money in an FDIC or NCUA-insured account," Ewer said in a statement, referring by acronym to two U.S. agencies that insure deposits.
Stanford Federal and Citi confirmed their roles.
"This agreement has the potential to expand the reach and breadth of our customer base," Citi spokeswoman Liz Fogarty said. "Privacy and transparency are, and will continue to be, critical priorities."
Joan Opp, president and chief executive of Stanford Federal, described the deal as "critical to remaining relevant and meeting consumer expectations."
Traditional banks have long partnered with companies outside the industry to lure deposits or expand their loan books.
The most recent prominent example is Goldman Sachs Group Inc
The Wall Street Journal reported earlier on Google's plan and quoted Caesar Sengupta, general manager and vice president of payments at Google, as describing an approach of partnering deeply with banks.
"It may be the slightly longer path, but it's more sustainable," Sengupta said.
Leaning on the regulatory and financial know-how of banks could allow Google to proceed without engaging much with bank regulators.
For instance, deposits are stored in an account managed by a regulated bank and protected by the Federal Deposit Insurance Corp (FDIC) and National Credit Union Administration (NCUA), and if the lender does not share consumers’ financial data with Google, there may not be a regulatory problem or license requirements.
Google's biggest success in financial services has been in India, where it has over 67 million monthly users for Google Pay, which is used to digitally pay for groceries, Uber rides and other transactions.
Though still behind Indian rivals, the Google Pay app's popularity in India has overshadowed its usage in the United States and other countries, where it can be used for cashless payments in stores and money transfers.
Sengupta had overseen the Indian service, formerly known as Tez, as head of Google's emerging markets product team. Chief Executive Sundar Pichai last year sought to build on the Indian app, developed by a team of about 150 employees in Asia, and merged it into Google's broader payments organization.
The move has given Sengupta oversight of several thousand workers worldwide, including those who maintain tools to help Google charge its advertisers and app store users.
Former Google Pay employees said the company faces a massive challenge gaining users for payment tools in locations such as the United States that have robust financial products already. High interest rates on deposits or major loyalty perks could become important incentives for Google to draw consumers, the former employees said.
On Tuesday, Facebook launched a unified payment service through which users across its platforms can make payments without exiting the app, named Facebook Pay.
The effort is separate from Facebook's plan to launch its Libra cryptocurrency, which has met with skepticism from U.S., European and Australian regulators concerned about the risk of money laundering and the security of transactions and user data.
(Reporting by Paresh Dave in San Francisco and Munsif Vengattil in Bengaluru; Additional reporting by Neha Malara in Bengaluru, Susan Heavey in Washington and Lauren LaCapra in New York; Editing by Peter Henderson, Jonathan Oatis and Tom Brown)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.