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Google Inc (GOOG), eBay Inc (EBAY),, Inc. (AMZN) & Apple Inc. (AAPL): Are Tech Companies a Threat To Banks?

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It’s about time for banks to start monitoring companies like Google Inc (NASDAQ:GOOG), eBay Inc (NASDAQ:EBAY),, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL). Why? Well, a significant amount of online purchases are being made through the websites of these giants. As of now, banks have no reason to worry as credit cards and personal accounts are linked to purchases made online. However, it won’t be long until all these four companies release their own digital payment methods. As investors, it is a good idea for us to keep a watch out for tech announcements related to banking. A significant amount of users prefer purchasing high priced goods online because of competitive pricing. Now that online wallets have already come into the picture, customers might not depend on banks as much as they did before.

Google Inc (GOOG)

In a recent report by Deutsche Bank, non-banking transactions are set to rise to 8% from 6% by the end of this year. This gives financial institutions a reason to worry as customers seem to trust tech companies with their money.

Google’s recent investment – Lending Club

Google Inc (NASDAQ:GOOG) has invested a total of $125 million for a 7% stake in Lending Club. This a peer to peer loan website that offers personal loans to customers at interest rates significantly below those of credit cards and other financial institutions.

Lending Club has loaned out a total of $1.7 billion since 2007. The company has reported 22 quarters with positive returns, and these are consecutive quarters that highlight a commendable growth rate. They’re anticipating a total of $2 billion in loans by the end of the present fiscal year.

Google had a tough time to get their 7% stake in the company. The founders of the company did not allow Google Inc (NASDAQ:GOOG) to purchase any shares directly as they did not issue any new shares. TechCrunch has recently reported that the company might be preparing for an IPO next year.

Google’s has a payment system “Google Wallet,” which is quite similar to eBay Inc (NASDAQ:EBAY)’s Paypal. Credit cards had to be linked to Google Wallet for customers to use this service. With a Lending Club tie up, Google can now offer their own credit service at a much cheaper rate. I wouldn’t be surprised if I see a physical Google credit card a few years down the lane–in fact, Google Inc (NASDAQ:GOOG)’s already set to launch a plastic card to fill your Google wallet.

It’s not just banks that have to worry about such a threat; financial giants Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) would also see a major share of their business being stolen. If everything falls in place, Google could offer a cheaper merchant fees and take the financial market by storm.

Paypal’s plot

eBay’s payment method PayPal has always been a threat to financial institutions. With the introduction of Green Dot, customers no longer require their bank accounts to be linked to PayPal to make payments. Just like any prepaid card, Green Dot can be bought from retail stores and be used to deposit funds into your PayPal account for purchases.

Another very interesting move by eBay Inc (NASDAQ:EBAY) is advising customers to opt for payments via MoneyPak. eBay seems to be attempting to cut out banks from their system, and they’re doing so by informing customers on their website about MoneyPak and how they could avoid bank interest rates and fees by using it.

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