Google is making a big change to its mobile payment service, Google Wallet, Yahoo Finance has learned. Funds that are left in Google Wallet will now be FDIC-insured, which means Google users’ money is now a whole lot safer — and they probably never even knew it.
Here’s why this matters: when you stash your cash in mobile payment apps like Venmo, PayPal and Google Wallet, that money is not FDIC-insured. The Federal Deposit Insurance Corporation protects funds held by banking institutions up to $250,000. This is a good thing because, as history has proven time and again, banks can fail and when they do, the little guys need someone looking out for them.
These hot new money transfer services fall under the category of “non-banking institutions,” which includes the likes of payday lenders and prepaid debit cards. As a nonbank, they aren’t legally required to be federally insured.
These aren’t places consumers normally park their money, but rather tools to transfer funds from one person or entity to another. But that doesn’t mean customers don’t use them to stash their cash. For example, Google Wallet customers who send cash to or receive cash from other Google users can choose to keep those funds in what’s called their Wallet Balance.
As of now, Google Wallet’s user agreement says balances are not FDIC-insured. However, a Google spokesperson confirmed in a statement to Yahoo Finance that its current policy has changed. The company will hold Wallet balances in multiple banking institutions that are FDIC-insured, which means if anything were to happen to the company, users funds’ would be protected.The spokesperson did not provide any further details or say when the company would update its user agreement.
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