NEW YORK (MainStreet)—Perhaps the most popular e-mail service in the world can save a payment system that is not.

At its recent developers conference in San Francisco — Google I/O — the search engine giant with little fanfare announced Gmail users with Google Wallets will be able to send money person-to-person by merely e-mailing. The company said it would begin rolling out the feature through the coming months to all U.S. Gmail users 18 years and older.

"There's no doubt this is a pretty simple way to send money," said Greg Sterling, principal analyst at Sterling Market Intelligence. "The challenge will be educating people about the feature. Can it promote the tool and build trust among users? Google has sometimes failed to do that."

The feature allows Gmail users who have a Google Wallet to click the '$' icon under the attachment link and attach money to their message. The feature is free to send money from a bank account or to receive money. Payments from a credit or debit card will incur a 2.9% charge — the same as current, point-of-sale transactions.

While analysts agree the new Gmail feature seems useful and easy, the question remains if it is enough to stall the funeral procession for the Google Wallet. The embattled program recently saw the departure of its architect, Osama Bedier, as well as a last-minute decision not to introduce a physical plastic payment card.

Although many see a market for digital wallets, most are not sure when that market actually will materialize, nor if Google still will be a player.

"I believe that if we look into the future, things will change," said technology analyst Jeff Kagen. "Today we don't leave the house without car keys, wallet and our smartphone. Tomorrow we'll just take our smartphone. Everything will be inside. We can simply push the button on the dash to start the car because the chip is in our smartphone. We will be able to charge anything we want to our credit cards which are stored on our smartphone, as well as having access to all out accounts.¿"

Kagen said the sector just is in its very early stages.¿


"When will all this happen is the big question," Kagen added. "It should have started already, and it is, basically, but it's not the big industry reshaping tidal wave we were expecting, yet."


Google likely will have to keep adding features to stay in a race with competitors like PayPal and Square. Just late last year, Google announced a pilot program for the Google AdWords credit card for small businesses in the U.K. and the U.S. Google hopes such features make its wallet and its place in the financial sector more visible.

According to a recent comScore survey, 72% of respondents said they had heard of the PayPal wallet, while just 41% had heard of Google's product — and only 8% said they had ever used it.

"Obviously a lot of people are up in the air about the wallet," Sterling said. "But this is a very simple way to transfer money and a lot of people use e-mail. If Google can leverage that and educate people about the tool, it could help its wallet product."

Sterling pointed to the wide-spread use of mobile banking as a good illustration of people willing to use convenient technology to move money.

Kagen said he also will take a wait-and-see attitude.

"This will help Google strengthen their offerings another degree," he said. "This is good. However I don't see this really transforming Google in any way. Not yet anyway.¿"

--Written by Chris Metinko for MainStreet