Unless you’re the sort of person that would read all the user agreements before clicking I Accept (which technically we all should do but oftentimes, it’s TLDR), then you probably didn’t know that the money you store on mobile payment services like Paypal, Venmo, and Google Wallet are not FDIC-insured. This means that if any of those apps or businesses close down, it would take you a whole, long process before you can recover your money. But Google is reportedly changing their policy, making your money with them more secure.
According to a Google Wallet spokesperson, their policy regarding FDIC insurance is changing and that the money you’re storing with the service will be protected if ever Google will ever go under. Yeah, we know, there’s a fat chance of that happening, but in this day and age, you never know. But what does FDIC-insured actually mean? The Federal Deposit Insurance Corporation ensures protection over funds held by banking institutions up to $250,000. But since the aforementioned mobile payment services are technically non-banking institutions, then they are not legally required to be insured under the FDIC.
In reality, people just use Google Wallet and the likes to transfer money from one entity to another, and normally, you would withdraw or transfer that money to your own bank that’s connected to the service. But what if you just want to store the money in there, for future and possible online transactions? Then that’s where FDIC insurance will come in handy, just in case that business suddenly closes down. If the service is not FDIC-insured, then it means you’d have to go through a bankruptcy court. But with insurance, then the government would be the one to return your money to you and you will get it in a matter of days.
However, Google hasn’t officially made a statement about this, except that confirmation from an unnamed source. No details yet as to when they will be updating the user agreement, so don’t bother reading through it yet, unless you really want to understand what it was that you accepted.
VIA: Yahoo Finance