The Gift Card Sector Comes of Age. Part 5 of 5: Disruption – The Slow Rise of Pre-paid Cards as a Financial Force

In this five part series, we have referred to gift cards and pre-paid cards interchangeably when traditionally there have been key differences – most notably that gift cards are generally one-time use, have no/few fees, and are not re-chargeable. But this reference was deliberate as emerging gift card solutions are empowering retailers to compete at the pre-paid card level. Which in turn enables retailers (many of whom already offer financial services) to become even more bank-like, but at lower cost and a more holistic view of the lifetime customer.
In this last post, we will look at two of the companies contributing to this shake-up – an emerging start-up featured as one of the 2015 Money20/20 Launchpad companies – Slide – and an established and rapidly growing alt fin services provider Cards.com.
Gift/Pre-paid Cards Will Permanently Replace Some Bank Accounts.
As previously discussed in this series, for Millennials and those entering the U.S. financial system for the first time, there is no really compelling reason to have a bank account. Even with rising interest rates, the return on holding your money in a bank is magnitudes lower than any number of alternative investment vehicles. Particularly for younger consumers who have low/no savings and high debt, using financial services that are low cost in absolute terms – not relatively speaking –are a priority. Dwolla and other low cost non-bank alternatives will likely see a spike in users in the coming years, particularly in the advent of a recession.
Slide: Gift Card Management for Consumers, A Platform for Retailers
Into this environment where many can “take or leave” the bank, there are increasingly viable, highly usable and even fun alternatives. Seed-funded Slide made its fintech industry debut at last year’s Money 20/20 conference, debuting at the show a suite of mobile gift card management features that presents the consumer user with the ability to manage their gift cards all in a single wallet app. As compelling from the retailer’s perspective, the company enables the consumer to buy – and reload – their gift cards in a theoretically infinite number of designs, adding a level of engagement with the brand not available on typical gift card sites, which tend to present brands in a mass market, commoditizing the value of the gift card itself and burying the brand in a sea of logos. The company’s plans include adding the ability to instantly trade and transfer gift cards, placing the start-up in the realm of P2P payments.
What’s interesting about Slide are its initial users, who are not so much the typical tech early adopter, but who are more representative of the general population, such as mothers. According to Slide co-founder and CEO Mike Morris (formerly with American Express), “Slide users come from pretty much every corner/pocket across the country who share such common pain as managing their gift cards.”
Retailers, some of whom have previously declined to have their gift cards sold online, are signing up with Slide. Morris observes that “The e-gift card industry is growing by 44% year-over-year, and merchants seem to be waking up to the fact that their gift card programs are generally underutilized and can be leveraged to engage and delight customers in new ways through digital experiences.”
Card.com: Branchless Bank with $450 Million in Deposits – and Counting
Last fall, CARD.COM announced $9 million in growth funding to expand its mobile tech offering and to move from word of mouth to marketing-driven customer acquisition. With over $450 million in deposits to date, CARD.com has clearly made in-roads into its goal of becoming a leading non-bank financial institution.
While CARD.com has no branches, 85% of their customers use their mobile app monthly, compared to the banking industry average of 30%. The remaining percentage use the service via the company’s website. Significantly, as a SaaS (software-as-a-service), the company can scale up quickly to meet demand. Where it has run into some issues, and where it plans to invest significantly, is in the area of real-time customer service. New service introductions can also be introduced relatively quickly as compared to the banks, with CARD.com set to launch sub accounts (for spouses, teens, domestic helpers, etc.). Much like Slide, CARD.com is seeing significantly traction amongst moms. And compared to non-card focused branchless banks GreenDot and NetSpend, CARD.com reports that over 85% of their deposits are direct deposits of paychecks (as compared to a 30-40% range) – and their number of deposits is significantly larger, despite having only launched three years ago. As a point of comparison — the mobile banking sector today represents only 2 million accounts out of a total 14 million (inclusive of those doing mobile banking via branched banks) according to the Digital Bank Report. CARD.com in comparison has more than 600,000 accounts.
The main driver behind this success? Customized cards and attention to serving the customer, even if that customer is unbanked. The service offers “Fair, Fashionable and Fun online prepaid card solutions” and treats its customer “as an individual who is cool like James Dean, sultry like Bettie Page or a cat-lover with a heart of gold. CARD.com lets you represent the things you care about, with awesome perks along the way.” Clearly not your average bank.
Going into 2016, the remaining stigmas against gift cards will be further chipped away as the sector matures beyond paycheck deposits and retail goods. In October 2015, Stockpile.com raised $15 million in a Series A round from superstar VC Sequoia Capital and rockstar actor Ashton Kutcher, amongst others. The service will enables consumers to buy company stock via gift cards at retail locations, helping to democratize and demystify investments (not good news for the few remaining retail Wall Street brokers).
Suffice it to say, gift cards are at the least hot. And on a relatively slow but steady trek towards true consumer financial revolution.
 

The Gift Card Sector Comes of Age. Part 4 of 5: Sector Outlook – Gift Cards as Alternative Banking

In part 3 of this gift card series, we looked at the business drivers behind increased consumer adoption. In this post we will further examine one of these drivers – the bundling of bank-like services into the pre-paid card relationship as an emerging consumer financial paradigm. This courting of the un-banked and under-banked by retailers and other non-bank entities represents an arguably permanent shift away from the traditional retail bank as consumers’ primary financial resource.
In the past, the “un-banked” and “underbanked” have referred to new country arrivals and those otherwise disadvantaged in the U.S. financial system – minors too young to have a checking account, young adults with no credit history, people unable to maintain the minimum balance requirements for a checking account, and so on. People alternatively have treated this issue as a problem for charity, or as a way to take further advantage of a group with few financial choices (i.e. predatory financial services — payday lenders and other consumer “subprime” credit providers with double-digit interest rates, low limits and high fees). But as bank fees rise (without the needed longer bank branch hours and other services/features needed by many people – underbanked or no), alternative banking is becoming a smart choice for the informed consumer across demographic and economic segments.
In this environment of disillusionment with the banking system (alt financial services users say that there are issues with the lack of “service,” “trust,” and “respect” from traditional institutions), more people are turning to alternative financial service products – and the market for these services is growing. A 2011 Federal Deposit Insurance Corporation (FDIC) survey revealed that 25% of all U.S. households used an alternative financial product between June 2010 and June 2011. The study also found that non-bank transaction services (i.e. non-bank money orders, check cashing and remittances), were used by 39% of U.S. households.
Fast forward to 2015, and the percentage of alternative financial service users amongst the low and middle classes has grown to 39%. While new payment models have been introduced to serve the involuntarily underbanked, companies like PayNearMe, which enables users to pay for goods and services online and in-store with a card backed by cash paid to a physical outlet – have experienced issues with a fractured market for its services as well as logistical, even store security issues when dealing with larger cash transactions. As such, those solutions that court consumers who are voluntarily opting out of the bank and credit card system – such as bitcoin and other cryptocurrency exchange services and emerging high-service, high usability gift and other pre-paid card products are gaining ground as they begin to capture multiple segments of the diverse un—and under-banked market.
Interestingly as banks move towards pushing the consumer into a self-serve model via ATM’s, email inquiries and fees for in-bank visits, pre-paid card issuers are increasing the levels of service that have traditionally been out of reach to the under-banked and other users of pre-paid value vehicles. As such, being a pre-paid cardholder – particularly at the platinum levels – is an attractive alt fin consumer choice. At the least, pre-paid cards can be seen as a way to augment a bank account.
Millennials: The First Wave for Alt Finance
More importantly, choosing to be un-banked is now a viable financial lifestyle choice. Whether as a result of people’s disillusionment with traditional banks, a desire to share less personal information with institutions, or because XXX, people who are able to participate in the larger banked population are choosing to instead to become at least partially unbanked, with their financial assets divided across multiple financial accounts. As significant, some users are skipping the banks altogether for more lucrative products like loans and going directly to alt finance specialty services such as SoFi, a lender focused on the millennial market.
Increasingly post-Millennials are choosing to eschew traditional banks altogether with the rise of alternatives such as Robinhood. And while the Millennials do have bank accounts with the majors, their money and perhaps more importantly, their transactions, are split amongst several institutions — as a hedge against another financial crisis, if unconsciously. While Millennials need – and value – financial advisement as much as other segments, they are getting their information from like-minded peer sources versus a bank expert – and they are likely to get their advice from multiple sources as well.
But several trends indicate that the ranks of the underbanked are growing as the un-banked and underbanked are presented with ever more “banking-like” options and with the emergence of innovative new offerings that provide consumers with options that the banks have been slow to offer, or which have previously only been available to those with stellar credit and/or large deposit accounts. In comparison with fee-laden bank accounts, pre-paid cards are highly attractive. American Express offers:

  • No credit check
  • No minimum balance
  • No hidden fees
  • Value-add services such as online bill pay, tools to manage your money
  • Cash-back on premier tier (with minimum loads)
  • Free direct deposit
  • Large scale cash re-load networks (45,000+) and ATM access
  • Subaccounts
  • Mobile capabilities
  • Connected to your checking/savings account

In addition, the American Express-Walmart Bluebird offers:

  • Dedicated customer service
  • Check-writing
  • Transfer funds between Bluebird and checking/savings accounts

While the pre-paid business currently represents a relatively small 2% of the business, it may figure importantly as American Express struggles to keep its high net worth customers, and in the wake of such losses at the Costco co-brand account. The pre-paid business is experiencing triple year-over-year growth as a result of these attractive features, though in the scope of AmEx’s overall business, pre-paid is not contributing significantly to the company’s profitablity.
But that’s not the point. AmEx is developing consumer relationships — building brand, goodwill and a customer pipeline for higher margin products. In this manner, American Express is able to tap into consumer segments that had previously been unable to them, and to potentially retain the customer relationship if and when a pre-paid card user is able to, or decides to become banked.
In the final part of this five-part series on gift cards, we will look at two companies in particular – one a recently launched start-up and the other an established and fast-growing force in the pre-paid cards business – that are focusing on usability and merchant/brand relationships to capitalize on the rising use of stored value cards as non-bank financial account vehicles.

The Gift Card Sector Comes of Age. Part 2 of 5: The Business, Social and Technology Trends Driving E-Gift Card Adoption, Innovation and Investment

In Part One of our look at the gift card sector, we provided an overview of the accelerated activity characterizing the sector over the past 4 years. Now in Part Two, we will examine some of the drivers behind the segment’s growth.
The Investment Perspective
FinTech in general is hot. And Square’s meteoric rise, led by Twitter CEO Jack Dorsey, made retail POS – and payments in general — sexy in that “ripe for innovation” kind of way. As a segment within the FinTech category that correlates closely with the growth of mobile payment technologies, e-gift cards are understandably an area of interest. And an area that is not yet saturated or highly visible (relative to say, the post-Square POS me-too frenzy), enabling even smaller funds to get in on a good deal.
Mobile Device and App Proliferation
The ubiquity of smart phones and the emerging use of mobile wallets makes e-gift card transactions a logical next step in ecommerce adoption for early adopter/tech savvy consumers. And for the underbanked, who are increasingly mobilized, e-gift apps can be the first and/or are the only step available to them for participating in the electronic purchase of goods and services.
Consumer Migration To All Things Digital
U.S. consumers are clearly weary of the physical store. This season’s unprecedented boycott of in-store Black Friday by some major retailers like REI and consumers’ growing weariness with, and wariness of the physical retail store experience this year reached an inflection point, morphing from mere disenchantment to angry action, with growing support for the consumer boycotting of Black Friday.
Rather than abandoning the retailers, consumers continued to engage with their favored brands online, with REI experiencing a 10-26% rise in online sales during the Thanksgiving holiday, according to digital analytics company SimilarWeb. Other retailers saw even more dramatic increases in online sales, with GameStop and Staples experiencing a one-day rise of 120%+, PetSmart a rise of 69% and Nordstrom and Pier1 both reporting a 54% one-day rise in web traffic. Overall, Black Friday in-store sales dropped by more than $1 billion – or 10% from previous year holiday sales while online sales increased. In fact, a National Retail Federation (NRF) survey found that indeed more people shopped online (103 million) than at the store (102 million) during the Thanksgiving/Black Friday period.
Gift cards are playing a part in this migration online, with consumer attitudes about gift cards changing as the sector provides more value-added features that increase the level of both physical and e-gift card personalization available to consumers, and that provide the convenience of allowing users to add value, store and transact with the cards anytime, anywhere. Moreover, marketplaces like Raise, Cardpool and Giftcards.com are enabling people to buy gift cards online for a discount, making gift cards even more appealing in some cases than the purchase of a discounted physical good as you could theoretically double dip – use the full value of a discounted card to buy a wanted item when it goes on sale.
At the same time, in both the U.S. and Canada, e-gift cards are not only viewed as acceptable, but increasingly as the preferred way to show gift appreciation.
In the next Part Three of this series about the gift card sector, we’ll look at how the growth of gift card business model and technology innovation is not just about the convenience of the pre-paid card, but about a larger trend towards the de-centralization of consumer finances, driven by such factors as millennial distrust of the bank as the sole institution for housing one’s money, and the broadening ranks of the under-banked.

The Gift Card Sector Comes of Age (Series). Part 1 of 5: Gift Cards are Cool Again (and Everyone Wants In)

The gift card sector is sizzling these days – more so than they’ve ever been. In the past four years, there has been a significant uptick in new technology and new business models in the sector. The new entrants have reached critical mass such that this year’s Money2020 conference organizers selected an e-gift card start-up — Slide – to be amongst its featured Launchpad 360 companies, and chose to include in this year’s agenda several sessions on the topic of gift and pre-paid cards, with one session proclaiming that The Gift Card Is Cool Again.
But the real indicator that there is real opportunity in the sector is that there is diverse and large-scale investment being put into the e-gift card sector. While obvious that MasterCard would include companies like Slide in its incubator program, celebrities such as Mary Hart (a Yiftee investor), national retailers, small fintech funds as well as top tier VC’s like Bessemer Venture Partners are identifying both market need and product fit within the sector.
Companies such as Loop Commerce (not to be confused with mobile wallet/POS company LoopPay) garnered a $16 million series B round in April 2015 to build out its e-gift card business, and more recently, Cards.com scored a $9 million growth capital facility this past November to expand services surrounding its custom e-gift card business. And gift card marketplace Raise is using the $56 million Series B round the company secured in January of this year to expand aggressively — growing from four employees working out of a small apartment in 2013 to a 200+ workforce housed in a 50,000 square foot space in Chicago’s Loop business district. On a smaller scale, hyper-local e-gift provider Yiftee has carved out its own market niche, raising over $3 million since its founding in 2011.
Gift card companies are also being acquired by some of the fintech industry’s most formidable players, with First Data Corporation buying bitcoin-based Gyft in July of 2014, less than a year after the start-up’s $5 million series A round. One year later, First Data continued its mission of building the “industry’s most integrated, complete and comprehensive prepaid gift card solution at scale” via its acquisition of Transaction Wireless, a digital gift card distribution and marketing platform.
In the meantime, established gift card infrastructure companies are growing and consolidating. Similar in rationale to eBay’s separation from PayPal, Safeway (yes the grocery chain) spun off its fast-growing gift card division Blackhawk Networks in April 2014. A year earlier in April 2013, the wholly-owned subsidiary had raised $230 million, for a market value of $1.2 billion. Significantly, the sale was led by Tier One banks Goldman Sachs, Bank of America, Citigroup and Deutsche Bank. Eight months post-IPO, Blackhawk purchased European gift card startup Retailo, deepening its international reach (20 countries) and continuing to diversify outside the U.S.
So why is the gift card sector taking off now? There is a confluence of factors that are contributing to the rise of the e-gift card. The most important is the advent of mobile. While no single mobile wallet has taken off across all consumer demographics, the plethora of offerings and accompanying marketing drives have contributed to a consumer belief that transacting via one’s mobile device is reasonably safe and a viable way to pay (as opposed to using cash or a card). Add to that the willingness of consumers to trade electronic security and their personal information (PII) for the convenience of mobile and you have a situation where the loading of gift card value onto one’s phone is a better way to manage these pre-paid assets. We’ll take a look at mobility and the other social, business and technology trends that are making pre-paid value cards relevant and valuable to both consumers and businesses in part two of this five part series.

Square files to go public

Square filed an initial public offering today.
The payments company, which was co-founded by Jack Dorsey and Jim McKelvey in 2009, has been rumored to be planing a public offering for some time. Now it has filed its S-1 with the US Securities and Exchange Commission.
Square will be listed on the New York Stock Exchange with the “SQ” symbol. The NYSE became popular among tech companies looking to go public in 2013, after Nasdaq was widely perceived to have bungled Facebook’s public offering.
Dorsey serves as the company’s chief executive, and was also recently named the full-time CEO at Twitter, the other company he co-founded. Interestingly, Square mentions in the S-1 filling that Dorsey’s split attention between the two companies could be a risk factor.
Dorsey for his part does, however, explain his commitment to Square in a letter included in the filing:

I believe so much in the potential of this company to drive positive impact in my lifetime that over the past two years I have given over 15 million shares, or 20% of my own equity, back to both Square and the Start Small Foundation, a new organization I created to meaningfully invest in the folks who inspire us: artists, musicians, and local businesses, with a special focus on underserved communities around the world. The shares being made available for the directed share program in this offering are being sold by the Start Small Foundation, giving Square customers the ability to buy equity to support the Foundation. I have also committed to give 40 million more of my shares, an additional 10% of the company, to invest in this cause. I’d rather have a smaller part of something big than a bigger part of something small.

Fusion notes that even as Square’s revenues grew by $298 million between 2013 and 2014, its losses also grew by $50 million in the same period. (It drew $561 million in revenues in the first half of 2015 and lost $78 million in that time.)
Previous reports indicate that Square plans to complete its initial public offering by the end of the year. The company has not yet revealed its initial price range, nor how many of its shares it plans to sell in the offering.

Twitter board ‘warming’ to idea of Dorsey as full-time CEO

It has been 89 days since Twitter has had a full-time chief executive. That might change now that the company’s board has reportedly warmed to the idea of making Jack Dorsey, the interim CEO, the permanent leader of the company he co-founded.
The New York Times reports that Twitter’s board is considering the possibility of having Dorsey lead the company again, despite initial misgivings about how he’d do the job while remaining the CEO of Square, the payments company he co-founded.
Dick Costolo left his position as Twitter’s CEO on July 1. “I initiated conversations with some members of the board at the end of last year about CEO succession as I contemplated what was next for me,” Costolo said in June. “And ultimately following discussions with the full board and at February meeting and then at our meeting last week, we agree that now is the right time to begin this transition.”
Costolo remains on Twitter’s board of directors, and is presumably helping the company find his replacement. Yet he has reportedly planned to leave the board — thus severing all ties with the company he led between 2010 and 2015 — as well.
Twitter’s board has been searching for Costolo’s permanent replacement since that announcement was made in June. But now, almost three months after Costolo left, the question of whether or not Dorsey will receive the title remains unanswered.
This has frustrated Chris Sacca, a venture capitalist and Twitter board member. “Good board of directors? They can name a new CEO by the end of the week,” he tweeted when Volkswagen replaced its CEO following the emissions scandal. “But the Twitter board? Nothing for months.” Sacca has been vocal about his support for Dorsey being named Twitter’s CEO and praised the company under his leadership.
There has already been one sign that Dorsey leading both Twitter and Square could benefit the companies: A partnership that makes it easy for Twitter users to donate to politicians. That partnership could, as I argued before, increase the visibility of both services while also giving Twitter users a reason to interact with the service. The two companies could doubtless find other ways to complement each other.
The New York Times is quick to note that Dorsey’s ascension to Twitter’s CEO isn’t guaranteed. The board hasn’t yet made its decision, and things can change quickly. But it seems like Dorsey’s appointment is more likely than it was a few months ago.

Windows Phone left out as Google Wallet swallows Softcard

Google purchased Softcard earlier this week, and today it posted a support page about what to expect from the mobile wallet service in the future as it shuts down. No surprises here: Android users should download Google Wallet, which is replacing Softcard. But for users of the Windows Phone Softcard app, there is no NFC payment alternative.

From the FAQ:

What about Softcard for Windows?
The Softcard for Windows Phone app will also be terminated. A specific termination date will be provided soon.

Softcard for Windows Phone, we hardly knew you. The app first launched on Microsoft mobile devices last fall for AT&T and Verizon subscribers, and allows users with NFC-equipped Windows Phones to make contactless payments at certain stores and restaurants, including McDonalds. Because Windows Phones aren’t equipped with fingerprint readers yet, users have to enter a PIN to unlock the digital wallet.

softcard windows phone

When Softcard exits the Windows Phone store, it leaves the platform without a NFC-enabled payments app. Microsoft Wallet can theoretically make NFC payments, but its acceptance has been slow, possibly due to resistance from the carriers (who were committed to Softcard.) Android devices can download Google Wallet, obviously, and Apple’s iPhones have Apple Pay. The Softcard FAQ doesn’t mention Softcard on iPhone, but the plans to enable Softcard on the iPhone using an “integrated secure SIM-based hardware solution” (an NFC-enabled iPhone sleeve) are probably on the back-burner, too.

The decision to pull the Windows Phone Softcard app might not be a snub intended to hurt Windows Phone. It’s possible that Google has simply decided that the relatively few Windows Phone users weren’t worth the extra resources to support the platform. Plus, Google Wallet could end up going cross-platform in the future. But it’s still an example of how Microsoft’s inability to gain traction with its mobile operating system is closing doors for its users, as well as for Microsoft itself in the rapidly heating-up mobile payments market.

https://www.youtube.com/watch?v=nNXc-fvIItw

 

Stripe makes its bitcoin pilot available to all US users

After nearly a year of testing bitcoin payments with select customers, Stripe is making the cryptocurrency an option for all of its customers – of at least those with a U.S. bank account. Stripe provides the payment processing for sharing economy apps, online retailers and mobile developers, and they will now be able to add bitcoin to the payment choices on their websites and in their apps with a line of code. Stripe converts all bitcoin transactions into U.S. currency, and it charges a 0.5 percent fee for each transaction.

Google said to be testing a point-of-sale system called Plaso

Google Wallet may not have been the hit Google had hoped, but according to a news report, the Silicon Valley giant may try to breath new life into its mobile payments business by tackling not just the digital billfold, but the digital cash register as well.

[company]Google[/company] has been testing new retail point-of-sale software that works on Android or device or integrates with a store’s existing payment processing system, according to a new report from The Information. The service is called Plaso – pronounced “Play-So” – and it allows customers to pay for goods and services by giving their initials to the sales clerk at the register, The Information’s unnamed sources said.

If that sounds like the failed Square Wallet, you’re right. Plaso appears to be using Bluetooth beacon technology to detect Google’s digital payments apps on smartphones physically in the store or near check out. Like Square Wallet, you would say your initials or name so the salesclerk can suss out which of the detected wallet belongs to you, and then I assume some kind of digital transfer of card credentials would occur either from the device or from the cloud.

While the Information wasn’t able to learn much about the technical underpinnings of Plaso, I would also assume other kind of verification would be necessary, whether it’s a photo of the buyer appearing on the merchant’s screen – which is how Square Wallet worked – or an some kind of authorization on the buyer’s phone such as a thumbprint ID or a PIN code. Otherwise the potential for mistakes or outright fraud is too high; of all the forms of identity theft, guessing someone’s initials is probably the easiest to pull off.

There’s no word on when Plaso might see commercial use, and as The Information points out, Google builds and tests many products that never see the light of day.

The report also has it that Square is building its own Android tablet-based payments terminal because it fears a newly retail savvy [company]Apple[/company] will shut Square out of the iOS universe. I find that a bit hard to believe, though.

Square and iPad are often considered inseparable – Square even optimizes new versions of its gadgets for the changing thickness of the iPhone – but Square’s core point-of-sale device, the Reader, already works with Android phones and tablets. In fact, about half of all Square merchants use an Android device. Square’s countertop system Stand only works with iPads today, so I can easily see it developing an Android variant. But I just don’t think it’s a defensive move against Apple.

Apple needs Square and Square needs Apple. Square provides the register, and for it to be successful it needs to accept as many forms as payment as possible, including Apple Pay. Apple is on the other side of the equation. It makes the credit card, and for the Apple Pay to be successful it needs to be accepted by as many merchants as possible.

If either company were to blackball the other, they’d only be shooting themselves in the foot. Sure, Apple is ambitious and it may one day seek to offer its own retail payments service to compete with Square, but if it did so it would then compete with [company]First Data[/company], [company]Chase[/company] Paymentech, [company]Verifone[/company], [company]NCR[/company] and all of the other giants of the retail payments industry as well. Apple built up a lot of goodwill with those companies when it launched Apple Pay, and that goodwill is one of the key reasons for Apple Pay’s initial success. Why just toss it out the window?

Google Wallet takes its 1st trip overseas into UK Gmail accounts

For the first time, someone outside the U.S. will be able to use a Google Wallet to do something more than buy Android apps and content. Starting on Thursday, Google is bringing Send Money in Gmail money transfer to the UK, allowing users to transfer money to Wallet accounts via email messages, Google revealed in its Commerce Blog.

That’s by no means the full extent of Wallet’s capabilities, but it’s a big step considering the only Google Wallet feature available internationally has been in-store purchases on Google Play. There’s still no word on when the Google Wallet app will be available in the U.K., which would let smartphone users make direct money transfers, store their gift and loyalty cards and make contactless credit and debit card payments on Android phones that sport NFC chips.

But given the runaway success of Apple Pay (which has also driven more use of Wallet), you can bet Google is weighing an international expansion of mobile payments service as well. [company]Apple[/company] has confirmed it aims to bring Pay to U.K. iPhones and merchants in 2015.

For U.K. Gmail users, a £ icon will soon appear in the attachment bar of a Gmail missive (in the same place the $ appears in U.S. Gmail accounts today). You just click on that £ sign to either send money to or request money from the email’s recipient. Google created a video to show how it works:

[youtube https://www.youtube.com/watch?v=FVKwbZOFh3o]

Both parties need to have a Wallet account linked to a debit or bank account for the transaction to process. But as with competing peer-to-peer payment services such as PayPal, Square Cash, Venmo, Google will let you send money to anyone regardless of whether they have Gmail or Wallet accounts. The recipient, however, will be prompted to set up a Wallet account if they don’t already have one.

It’s a smart move by Google to launch with its Gmail money transfer service in the UK because it could lead to more Britons signing up for Wallet accounts. That means Google could have a larger ingrained user base for its financial services when it eventually launches the full-fledged Wallet app overseas.