The Financial Times reports that Google is getting into the credit business tomorrow in the United Kingdom, but this is not a typical credit card. It is only available for spending on Google’s own Adwords product.
Google’s decision to issue its own credit card, which will also be made available in the US within weeks and other unspecified countries later, signals the company’s first attempt to use its huge cash reserves to support its core search advertising business by subsidising low-interest rate credit lines.
Google provided all the info on its Adwords blog:
- In the UK, AdWords Business Credit will have a variable 11.9% APR Representative. In the US, AdWords Business Credit will offer an APR as low as 8.99%*, the same rate as in the pilot. Neither card will have annual fees, and they will both have an ample credit limit for AdWords.
- We’re teaming up with Barclaycard, part of the Barclays group, in the UK and Comenity Capital Bank in the US to issue the card. Both are MasterCard cards.
- AdWords Business Credit can only be used for AdWords advertising purchases.
A pilot program has been going on in the U.S. for over a year. The results of the study proved that Google could sell more and more valuable ad space by putting the money up front. Customers would receive between $200 and $100,000 a month to pay for their use of Adwords. The money, theoretically, would be paid back after Adwords drew bigger audiences and increased revenues of the client’s website.
This play is not an attempt at a new profit center or necessarily tied to (or confused with) Google Wallet. It is simply to drive higher revenues to Adwords—especially from cash-strapped companies.