Search engine giant Google is entering credit card business in the UK with the launch of AdWords program today which enables users to pay for advertising expenditure through Google credit card.
Google has collaborated with Barclaycard, part of the Barclays group, in the UK and Comenity Capital Bank in the US to issue the credit cards which are both from MasterCard.
The Google AdWords Business Credit cards will not have annual fees, and they will both have “an ample credit limit” for AdWords. The AdWords Business Credit card can be used only for AdWords advertising purchases.
Through Google credit cards, the search engine giant is offering customers credit of between $200 and $100,000 a month to pay for their use of Adwords. Google has set its initial interest rates considerably lower than prevailing market rates on credit cards for small and medium-sized businesses, with an 8.99% rate in the US and 11.9% in the UK.
Google’s decision to launch its own line of credit cards shows that it wants to use its huge cash reserves to support its core search advertising business by subsidising low-interest rate credit lines.
Google executives might dabble with financial services in future as well with the provision of more lending products to the small and medium-sized businesses that constitute for the bulk of its 1 million search advertising customers, though they said that Google was not planning any moves at present.
“We are helping them, uniquely, with online marketing – we aren’t going into a finance business as Google”, said Francoise Brougher, vice-president of sales and operations for small and medium businesses at Google.
Google’s move marks a direct attack on its competitor Amazon which has begun issuing loans to independent sellers that offer their products on its marketplace, marking the online retailer’s first move into financial services.