Banking News

Payments licence awarded to Google

(7 January 2019 – Europe) The Central Bank of Ireland has authorised Google Payment Ireland to acquire and issue payments anywhere in the European Union (EU) under passporting rights as part of the second Payment Services Directive (PSD2).

Importantly this does not grant Google with the ability to offer a full banking service including bank accounts and loans. Google’s newly acquired capacity to operate as a payments institution may see the tech giant significantly expand its financial services offerings across the EU.

Currently Google's primary payments product is its digital wallet Google Pay, which offers a limited number of financial services. Google has also been granted a full e-money licence by the central bank of Lithuania, the 39th it has granted so far, second only to the UK which has issued 128. Facebook was granted an ‘e-money’ licence by the Irish central bank in 2017 although it has yet to fully develop its payments offering and Amazon has released statements about competing directly with incumbent banks' for payment services. Google has previously suggested that the company is more interested in working with banks to develop opportunities in the payments market rather than looking to compete. In addition to the competition between banks, neo-banks and big tech firms, there is also a developing rivalry between European domiciles to attract some of these prospective payment companies by offering them licences.

Separately in the United Kingdom credit card spending rose an annual 7.5 percent in November as consumers increasingly prefer to spend on plastic according to UK Finance. Consumers spent £11.3 billion pounds on credit cards last month. Over the past twelve months, the outstanding level of borrowing grew by 5.3 percent. “The increase in spending, which is largely offset by cardholder repayments, reflects the growing use of credit cards as a preferred form of payment, particularly in travel, as consumers take advantage of stronger customer protection and value-added benefits,” Eric Leenders, managing director for personal finance, said.