Sounds like 2 genius ways for Google to extract more revenue from their core service.
One, they'll start seeing increased sales from companies who can now spend money on Adwords they don't currently have in the bank. This revenue is almost 100% new since the capital was not available before. Although, it's possible some companies were just using other credit cards to finance their ad buys.
Two, Google would start collecting interest. This doesn't sounds cheap if you consider the risk of default and actually collecting on those default. But they could probably sell those loans to collection agencies and still make a profit.
This looks like a co-brand card and so Google will not necessarily collect the interest revenue. All the risks and revenue are typically borne by the bank (there may be complex provisions so we will not know the exact deal structure for sure) and sometimes there will be profit sharing. Google will mainly save on the interchange (transaction fees) and may have a say on some of underwriting policies.
Comments
Sounds like 2 genius ways for Google to extract more revenue from their core service.
One, they'll start seeing increased sales from companies who can now spend money on Adwords they don't currently have in the bank. This revenue is almost 100% new since the capital was not available before. Although, it's possible some companies were just using other credit cards to finance their ad buys.
Two, Google would start collecting interest. This doesn't sounds cheap if you consider the risk of default and actually collecting on those default. But they could probably sell those loans to collection agencies and still make a profit.
This looks like a co-brand card and so Google will not necessarily collect the interest revenue. All the risks and revenue are typically borne by the bank (there may be complex provisions so we will not know the exact deal structure for sure) and sometimes there will be profit sharing. Google will mainly save on the interchange (transaction fees) and may have a say on some of underwriting policies.