Google caused a stir this week when it announced a complete re-vamp of its Google Pay service. The old Google Pay was web-based and allowed for free payments by using debit accounts (the ACH network). The new Google Pay is SMS-based and imposes fees on all transactions including debit accounts. (And since it is built on top of SMS, the new Google pay works only on cell phones. It does not work on desktops, laptops, or wifi-only tablets.)
To make matters more confusing, the old service was named "Google Pay". The new service is also named "Google Pay".
Reaction has been sharp. The discussions thus far run along the lines of "Google kills another usable service" to "this change brings no benefit to the customer". Both ideas are correct, but no one has asked why Google would make such a change.
So why would Google make such a change?
A few reasons come to mind.
First, an SMS-based payment system works well in India, which is a large market for Google. A payment system in India, especially one in which every transaction provides income to Google, would help Google's bottom line.
That doesn't explain why Google would eliminate a working payment system in the US and force its current customers to change to the new Google Pay. The change requires not only installing the new app but also re-registering (with a phone number) and rebuilding contact lists.
I think that more is going on than an evil plan to make users dance through hoops. Which brings me to my second idea.
I think Google, internally, is reviewing its offerings and looking at ways to increase profits. It may be that Google (or Alphabet, it's not clear who is calling the shots here) is looking to grow revenues. Google is doing this by either reducing or eliminating its free services, replacing them with paid-for services.
Google started as a search engine, but wowed the world with its e-mail system. It offered free e-mail with extra large storage (1GB per account) at a time when most companies charged for e-mail and limited storage to hundreds of Kilobytes, perhaps a Megabyte or two. The few free e-mail services offered even less storage.
After e-mail, Google offered many other services, most of them free. But over time, the free services are becoming... not free. Services that were free for individuals had costs for organizations. Of course, the accounts for organizations had extra features that individual users never needed, such as administrative functions and group permissions. It was easy to justify the fees.
Google charging more fees is, I think, the way of the future. Google has a large user base, and is most likely counting on people staying with Google, paying relatively small fees. If some customers leave, Google will probably not miss them.
It may be that paying for services is the way of the future. It may shock some users, and there may be much shouting and gnashing of teeth, but it is a definite possibility.
What interests me is the notion that Google is doing this not because they want to, and not because they can, but because the have to. Is it possible that advertising revenue (Google's current source of income) is no longer sufficient to power Google?
