Google Inc. is getting into the business of credit. The online search giant is rolling out a limited-use co-branded MasterCard for small-business owners to help them buy its search-based advertising.
World Financial Capital Bank is issuing the no-annual-fee card, which carries a fixed annual percentage interest rate of 8.99%. There are no rewards associated with the card.
Google is clearly eager to find new audiences for its vaunted search-based advertising services, analysts said, but a narrow-use credit card may not be the smoothest approach to reaching that market.
The technology to restrict purchases to specific types of merchandise or services is not new, and confining cardholders' purchases to advertising "will certainly limit the issuer's risk," said Brian Riley, a senior research director with TowerGroup. But the card appears to be unwieldy in several respects, he said.
"This card, as outlined, creates a lot of extra steps for Google and for prospective advertisers. A small business that wants to buy search advertising now has to apply for a card, then wait to get credit-qualified, and go through those approval steps. It's the opposite of simple," he said.
Moreover, many small-business owners are wary of accumulating "a lot of extra credit lines" that can hurt their ability to borrow funds through other channels, Riley said.
"The interest rate is relatively low, but online advertising can be pricey, and it's hard to imagine that a lot of small businesses are going to want to tie up what could potentially be some steep costs into a new credit line," he added.
Google's launch of the AdWords Business card is "somewhat surprising," said Megan Bramlette, director of knowledge management at Auriemma Consulting Group.
"I wouldn't call this the kind of introduction to payments I would expect to see from Google," Bramlette said. But the new co-branded card could be the company's first foray into other types of credit-based payment offerings, she said.
"Google may want to do something else with this card down the road, so it bears watching," Bramlette said.