Google Wallet accounts are now FDIC insured — will other mobile payments follow?

27 April, 2015 (16:57) | Blog | By: admin

Eric Van Susteren – Associate editor, Web and social – Silicon Valley Business Journal

Money left on your Google Wallet between transfers is now a lot more secure, according to an article by Yahoo Finance.

Mobile payment services like Google Wallet, Venmo and PayPal are nearly always used to send money from one place to another. However, some users choose not to send that money to their banks immediately and leave it stashed within the app. This is called Wallet Balance in Google’s case.

Payment apps don’t have to insure the cash that’s stored on them (the government considers them “non-banking institutions” — like payday lenders), so it’s unclear what effect Google’s move will have on the market. It could prompt established payments services like PayPal and Venmo or up-and-coming additions to the field to move toward insuring their cash.

It’s unlikely to affect consumers much, though. Users who use other payment apps for simple cash transfers shouldn’t worry, but money left inside payment apps isn’t insured (aside from Google Wallet, of course).

That means that in a worst-case scenario, users could be left in the wind if a payment company suddenly goes bankrupt and is unable to pay for the money trapped in mobile-payments limbo. That would mean users would have to extract their money in a probably-nasty bankruptcy court battle.

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