There’s one less thing to worry about. According to published reports, funds left in Google Wallet will now be FDIC insured.
Maybe you don’t keep wads of cash in a mobile app like Google Wallet, but you probably feel better knowing that if you do, up to $250,000 of your money is protected if the financial institution where Google Wallet holds its users’ funds go belly up.
Say you opened a savings account at a bank that wasn’t FDIC insured and they file for bankruptcy, you would need to take them to court to retrieve your money, which could take months or more, and you may not get the full amount returned. If a bank files for bankruptcy that is FDIC insured, you would receive your funds from the government in a much more timelier manner, says Chris Mettler, CEO and founder of CompareCards.com.
"Insuring funds by the FDIC is a great feature to offer during a time when safety and security is one of the biggest concerns for consumers," says Mettler. He adds that in a recent report, consumers expressed concern with Apple due to security concerns about entering in their credit card information.
Some experts say Google’s move is savvy. "As with prepaid cards, mobile payment apps like Google Wallet aren’t legally required to carry FDIC insurance. I believe it will only be a matter of time before all payment systems using NFC technology become FDIC insured," says Mettler.
MoneyCrashers.com financial columnist David Bakke thinks that if mobile payment systems ever get to the point where users are storing a lot of funds on them, other companies will need to add in FDIC protection.
"In light of Google, competitors will need to address how they protect these funds from default as well. I am not sure most people realize the risk in keeping funds in these ‘off deposit’ apps," points out Bryan Jardine, director of Fraud Prevention Solutions at Easy Solutions, a security vendor.
Edgar Dworsky, founder of ConsumerWorld.org, says the change becomes, "a competitive advantage for Google Wallet to promote that consumers’ funds are safe when held by them. Given a choice of having your money insured or not when held by an online entity, which do you think consumers would prefer more?" he asks.
Since many are still reluctant to conduct transactions online, this may be one small effort to reassure them that their money will be secured, he adds.
But some don’t think Google’s move will have much of an impact on mobile payments as a whole. Says Amad Ebrahimi, founder of Merchant Maverick, "Consumers have been preconditioned to accept some level of risk with their funds not being insured, so it’s not like we’re going to see a rush of late-adopters jump into mobile payments now that their money is safe."