In what some analysts view as a somewhat inefficient move to expand financing options to new advertisers, Google Inc. is rolling out a limited-use cobranded MasterCard targeting small-business owners.
Google is offering the AdWords Business credit product to select customers solely to purchase its search-based advertising services, a company spokesperson confirms to PaymentsSource via email.
World Financial Capital Bank is offering the no-annual-fee card, which carries a fixed annual percentage interest rate of 8.99%, no rewards and bases its credit limits on applicants’ credit profiles.
“We are beta testing the AdWords Business credit card with a small group of our U.S.-based advertisers,” the spokesperson said, adding that search advertising is “a tremendous driver of growth” for small businesses, “so we think it makes sense to give them a more attractive way to pay for AdWords.”
Analysts were skeptical about the card’s prospects to unlock significant numbers of new advertisers.
Google is clearly eager to find new audiences for its vaunted search-based advertising services, but a narrow-use credit card may not be the smoothest approach to reaching that market, Brian Riley, senior research director with TowerGroup, tells PaymentsSource.
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,” he says.
But the card appears to be unwieldy in several respects, Riley contends.
“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 says.
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 says.
“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 says.
Google’s move with the AdWords Business card is “somewhat surprising,” contends 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 says. But the new cobranded card could be the company’s first foray into other types of credit-based payment offerings, she notes.
“Google may want to do something else with this card down the road, so it bears watching,” Bramlette says.
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