It’s the news that smaller companies dread to hear; Big Tech is encroaching on your territory, but Square and PayPal shouldn’t worry.
On Wednesday, Google (NASDAQ: GOOG) appeared as the latest Big Tech member lending credence to Oscar Wilde’s famous quote:
“Imitation is the sincerest form of flattery”
And it looks like Google is imitating payment solutions leaders like Square and PayPal.
If you’re an Android user, you will likely have come into contact with Google Pay at some point or another, but Google’s latest updates have made it an entirely new beast altogether. Think ‘horse and cart to automobile’ levels of difference.
The new version of the app will have three tabs:
- Pay: Includes peer-to-peer payments, transaction history, and tap-to-pay.
- Explore: A medium for Google to offer deals and discounts.
- Insights: Connects to your bank accounts, enabling a searchable overview of your finances.
It doesn’t stop there either, with features such as receipt auto-scanning, fully online checking and savings accounts inside Google Pay, and more in the pipeline for 2021.
What does this mean for competitors?
Cash — paper currency — is dying, and payment solutions are the way of the future. At least that’s what analysts have been leading us to believe…
However true the ‘dying’ analogy is, there’s no denying that cash usage is falling. You don’t need to be Nostrodamus to know this, considering that we’ve been living with a pandemic and people aren’t exactly rushing to pass objects from hand to hand anymore. Even prior to this, cash payments had fallen year after year to just 30% of all U.S. transactions in 2019.
Meanwhile, the global payment processing solutions market is expected to rise to an estimated annual value of $140 billion by 2026. That leaves a lot of room for market leaders such as PayPal, Square, and Stripe, and is only likely to grow due to a number of market drivers such as:
- Increased promotion by government authorities to promote digital payment methods.
- Growing online payment usage, correlating with the exponential growth of e-commerce in 2020 and prior.
- A significant surge in smartphone users and the ease of payment solutions on such devices.
- Increasing efficiency and ease of online transactions as well as improved support.
Investors in businesses like Square should not worry about Google going full tilt into the payment game just yet as its involvement will likely only increase the number of users in the market over time thanks to its massive brand reach, and not necessarily stealing existing customers.
Pure-plays should never be underestimated, nor should the trust that users have in those businesses over the likes of Big Tech payment solutions offerings. At the end of the day, there is plenty of room for everyone in an ever-growing world of users looking for a cash alternative.
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