Amid all the silly jokes about Google Glass at the company's I/O Conference, there is one new development with potentially far reaching consequences for commerce and personal finance: You can now send money through Gmail.
Google Project Manager Travis Green explains in a blog post:
Google Wallet is now integrated with Gmail, so you can quickly and securely send money to friends and family directly within Gmail -- even if they don’t have a Gmail address. It's free to send money if your bank account is linked to Google Wallet or using your Google Wallet Balance, and low fees apply to send money using your linked credit or debit card.
To send money in Gmail, hover over the attachment paperclip, click the $ icon to attach money to your message, enter the amount you wish to send, and press send.
While sending money in Gmail is currently only available on desktop, you can send money from Google Wallet at wallet.google.com from your phone or laptop. You will need to have set up Google Wallet to send and receive money, and Google Wallet Purchase Protection covers you 100% against eligible unauthorized payments.
Initially, the feature will only be available for cutomers in the U.S., but if it were to go global at some point in the future, it's easy to imagine it revolutionizing the $440 billion-per-year global remittance economy.
As the Economist reported last year, most remittances currently go through banks and transfer agents that earn huge margins on money transers:
A World Bank study in 2009 found that banks charged an average of 12% for small remittances, whereas money-transfer agents such as Western Union averaged 9%.
Even though they undercut the banks, money-transfer agents earn mouth-watering margins on remittances. Western Union's were above 28% in many of its biggest markets last year. Margins are so fat because pricing is far from transparent. Western Union, for instance, sets prices for individual customers depending on where they are and the amount they send. To wire $500 to Mexico from Dallas costs $14. To send the same amount from New York costs $25.
The remittance market is obviously ripe for disruption and some internet- and mobile phone-based services are already competing with the big wires, but a service that already has the brand recognition and widespread use of Gmail seems like it could shake things up even more.
On the other hand, it also seems likely that the U.S. and other governments would want a way of tracing or blocking these payments. It will be interesting to see if, and how, Google plans to internationalize this service.