Google launches credit card in UK

Business-only Barclaycard-in-disguise will encourage AdWords purchase

Businesses in the United Kingdom have become the first in the world to have the chance of obtaining a Google credit card.

The Google AdWords Business Credit card” to give the plastic its formal name, is a tool the Chocolate Factory hopes small business will use to rack up big bills for online ads they don't have the cash to stump up for at the time of purchase, Brent Callinicos, Google's treasurer, told the FT its smaller customers “weren’t buying Adwords as much as they need to” and that he hopes the credit card will help cash-strapped customers keep their online ad presences at an appropriate level by using the card.

Google says the card's interest rate of 11.9% is “low”and that the offer represents “generous” terms

The card can only be used to purchase AdWords, although documentation (PDF) for the card contains what appears to be some vestigial terms from other credit cards inasmuch as cash advances are mentioned. Another oddity is a 2.99% “non-sterling transaction fee” that will mean users need to take care when making multi-nation ad purchases.

Not everyone will be able to apply for the card, which Google says can only be applied for with an application ID issued with an invitation.

The UK is the first nation to be granted the bounty of Google's credit card. The USA and other nations are set to follow suit, but Google is yet to say when.

When small businesses need to make investments in IT or other operations, it’s often the companies selling them the goods that help with financing solutions. Now it looks like Google is using that model to help drive more dollars to AdWords search advertising. Google says that from Monday it is launching a new service in the UK, AdWords Business Credit, which offers credit to companies specifically in the SMB sector to boost their online ad spend with the company.

This is not the first time that Google has offered credit to drive more AdWords investment — it’s been running a pilot with 1,400 companies in the U.S. for a year. Before that Google had run special offers giving people credits for more AdWords spend each time they invested in AdWords. This, however, is the first full commercial service of this kind.

The track record in the U.S. has been positive enough to see the company moving to full launches: In a blog post, Brent Callinicos, VP Treasurer for Google, notes that 74 percent of those in the U.S. pilot now use AdWords Business Credit as their “primary form of AdWords payment.”

Google will be following the UK launch with more invitations to users in the U.S. ahead of a full launch there, as well.

The UK launch is being run with Barclaycard in the UK and Comenity Capital Bank in the U.S. — both MasterCard-based cards.

In its Q2 earnings, Google noted that revenues, which it derives primarily from advertising, were $10.96 billion, a 21 percent increase over the year before. Revenues from the UK were $1.18 billion, or 11 percent of Google’s revenues in Q2. That’s level with the year before, and it could be that Google is going for a two-sided strategy here: both increasing business in the UK market, as well as coming up with more aggressive solutions for building up its ad business in a sector that has perhaps been hardest hit in the economic downturn.

While Amazon has lately been offering credit to its merchant partners in the form of Amazon Capital Services, Google is clear to note that AdWords Business Credit is only for AdWords — no other purchases are allowed.

Interest rates in the UK will be variable at 11.9 percent APR Representative, while the U.S. will be at 8.99 percent, as it has been in the pilot. Neither card will have annual fees, Google notes. This is lower than basic credit card rates, but given that the spend on these cards will all be going to Google, it’s a lucrative credit bet for the company. “You can assume we’re not doing this to lose money,” Callinicos said in an interview in the FT. He also noted, though, that this is not seen as a “profit center” for Google in the bigger scheme of things.