As you probably already know, last week Google launched P2P payments via Gmail (and through the Google Wallet mobile/online interface). Once authenticated, users simply "attach" funds to an email message (see inset).

Bank transfers (eg. ACH) are free while card-based payments will cost senders 2.9% of the amount, with a $0.30 minimum. However, all transactions are free for an unspecified time during the launch period.

With an estimated 400 to 500 million global Gmail users, the service has the potential to become an important method of sending money (it's only available to U.S. users at this point). However, like all U.S.-based P2P services, it's easy to send money, but not always so easy to receive it.

In my first test, I was able to claim the funds relatively easily with my four-year-old Google Wallet account. There was a short authentication process with a login, name, address, birth date and last 4 digits of my social security. After claiming the funds, I was then able to send money out of the system (note 2).

After sending my 2 cents over to Larry Page congratulating him on the launch (see screenshots below), I then sent money to my work email account. It was drop-dead simple to send the money, but I was unable to claim the money, despite already having an active Google Wallet associated with that email address.

After receiving the email notification, I went through the same authentication process as above. But after logging in and providing my personal info, I was hit with four additional out-of-wallet authentication questions, apparently pulled from public databases (I think NOT my credit bureau due to the errors..see below).

But apparently there was an error in the out-of-wallet Q&A served to me. The first two questions were obviously about me and I answered them correctly. The final two had nothing to do with me (note 6), so I answered "none of the above." But Google didn't believe me, and I was told my answers were "inconsistent" and that I could not be authenticated online.

I was invited to upload three pieces of documentation since I failed the Q&A (all required):

• Picture ID (eg. drivers license)
• Proof of address (eg. utility bill)
• Social security card

Unfortunately, I haven't laid eyes on my social security card for several decades and haven't a clue where it is. And in 18 years of testing online account opening, no one has ever asked for it. So I'm stuck. Had someone sent me a real payment, I would be extremely frustrated, and would have to ask them to send me a check or use PayPal.

Bottom line: This is a brilliant play by Google, taking everyone by surprise. However, P2P payments (in the USA anyway) are a still a pain to receive the first time which dampens their viral growth (note 6). I understand the reasons for good authentication, though it still seems like overkill given that I was only claiming a one-cent transfer via a pre-existing and active Google Wallet account (used for more than $400 worth of purchases this year). And especially after I provided the correct name, address, birth date, social security number and two additional out-of-wallet questions.

But I know the folks from Mountain View will work the risk procedure kinks out quickly (there is a reason it's called "beta"). And if they stick with it (RIP Google Reader), Google should be able to build a critical mass of financially-authenticated users, making "gpay" as easy as using PayPal.

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How Gmail Pay works

Step 1: Craft email message and click on the "$" icon at the bottom of the compose screen

Step 2: Attach funds via Wallet balance, bank transfers, or card; then add memo if desired

Step 3: Press send

Step 4: Final chance to review

Final: Confirmation copy is place in your inbox (note 8)

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Notes:
1. During the beta test, you can only become a P2P user by first receiving funds from an existing user.
2. I have two Google Wallet accounts, one set up in 2009 and the other established in January when I got a Nexus NFC phone with built-in Wallet support. The credit card associated with both accounts was stolen earlier this year and I had to add a new card to both wallets before I could use them. This could have triggered additional authentication requirements on the second Wallet account.
3. The payment appears as a "card" within a Gmail. There is no indication in the title of the message that it might contain money (user controls the rest of the email).
4. The transaction fee was waived for my Discover Card-based payment. I assume it would be on other card types, but I didn't test that.
5. Users have the option to add a memo to the payment (in addition to what's included in the email message).
6. Ironically, if the recipient was mobile-deposit-enabled, it would be easier the first time to send a high-res image of a check that the user could take a picture of and then deposit via mobile banking. Or, for Capital One 360 users, they could simple upload the emailed image directly into their account (see post). 
7. Though I suspect they could have been drawn from online info about my brother, who has a different first name and lives 2,000 miles from me.  
8. Yesterday, confirmation emails went to my inbox when I sent a payments. Tonight, I am not seeing that. It's only showing in my Sent messages.
9. For more info, see our recent Online Banking Report: Digital & Mobile Wallets (published Feb 2013, subscription).

After the final demos wrapped up on two fintech-packed days at FinovateSpring 2013, the audience voted for their favorite demos to ultimately decide who would be named Best of Show. The top 5 overall took home the trophies.

The winners (in alphabetical order):

We'll have the videos of all 72 demos posted on Finovate.com in a few weeks.

Thanks to everyone who joined the audience and came to be a part of our largest show so far. And thanks to the 77 innovators* who braved the Finovate stage. 

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*Five demos hosted a co-presenting company, including Visa, MasterCard, USAlliance Credit Union, Intuit, and Paydiant

Notes on methodology:  
1. Only audience members NOT associated with demoing companies were eligible to vote. Finovate employees did not vote.     
2. Attendees were encouraged to note their favorites during each day. At the end of the last demo, they chose their three favorites.    
3. The exact written instructions given to attendees: "Please rate (the companies) on the basis of demo quality and potential impact of the innovation demoed."  
4. The five companies appearing on the highest percentage of submitted ballots were named Best of Show.  
5. Go here for a list of previous Best of Show winners.

Now that the U.S. personal credit crisis of 2008 to 2010 is in the rear-view mirror (but still visible), banks and credit unions are getting more aggressive with credit. And guess what new marketing vehicle is available in 2013 that didn't exist 5 years ago? Yep, mobile this and mobile that.

So far, the sales component in mobile banking has been minimal. Generally, users must already be a customer of the bank and even pre-registered with online banking. And cross selling? About the only thing you can buy remotely is an ATM withdrawal.

But that will change as more customers only deal with their bank and cards through mobile apps, a number that is already pushing 30% of the online banking base of Bank of America (see previous post).

Eventually, most financial products will be sold through the mobile app. Not convinced? Look internationally where mobile was a thing even before the iPhone. I still remember Bankinter's 2007 BAI Retail Delivery presentation where they said 20% of their retail interest-rate swaps where done via mobile phone.

In the United States, we are starting to see banks pushing the envelope. USAA has been the leader in most areas. So no surprise that they are the first (that I know of) to place preapproved credit offers within their mobile app (see screenshots below).

In the bank's Dec. 2012 update (see inset), it added the ability to:

• Accept pre-approvals in the app
• Apply for checking and savings accounts in the app
• Apply for life insurance after getting a quote in the app

Bottom line: The power of the preapproved credit offer is well known. Traditionally, snail mail has been the medium of choice. But that's expensive, time consuming, and often times not delivered at the optimal moment. Delivering offers via mobile phone can solve all those problems.

And as an added bonus: The sales results will create a better business case for your entire mobile initiative.

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USAA delivers preapproved credit card offer within its mobile app (Dec 2013)
Note: Screenshots from customer with an existing USAA life insurance relationship.
Price disclosures (right screenshot) displayed after clicking "Rates and Fees" under "Accept Offer" (left screenshot)

Source: comScore Q4 2012 Mobile Financial Services Advisor

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Note: We cover online mobile delivery and marketing in depth in our subscription-based Online Banking Report.

comScore is compiling a wealth of digital usage data, both for desktop and mobile (see previous post). And luckily, they have agreed to let me share some of it here (see note 1).

The following chart is financial services usage data across 230 million U.S. mobile phone users aged 18 or older (note 2) in the United States as of year-end 2012. It includes any type of financial content, secure or public (i.e. this is not limited to secure access by account holders).

The data shows that 62 million (27%) of mobile users accessed financial content during the prior month (Dec. 2012 figures). The vast majority of those (87%) accessed bank content. Credit card or electronic payments (e.g. PayPal) were each used by about half the segment. And brokerage or insurance content was accessed by about 20% of mobile financial users.

Observation: The banking numbers have been widely circulated, but I hadn't seen recent breakouts in insurance and brokerage. Both were surprisingly high, especially insurance. If you assume there is generally one mobile financial user per household, that means that about 10% of all U.S. households are using mobile insurance info. Same on the brokerage side.

Source: comScore, compiled Dec. 2012

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Notes:
1. If you have requests, drop me a line and I'll see what I can find.  
2. Users of any type of mobile phone, smartphone or otherwise. Also includes text-message queries.

While it will never hang in the Louvre, Discover Card's email alert is a true masterpiece (at least to fintech geeks). The message is nicely laid out with plenty of white space and it's chock full of links to get more information.

Here's eight specific elements I like (in no particular order). See the corresponding number on screenshot below:

1. Personalized with first name, last name and last four digits of account number; an important anti-phishing security precaution

2. Big orange button that leads to detailed transaction info

3. Table outlining the key data (yellow highlight is ours):
     - Date of notice
     - Balance limit set by user
     - Current account balance
     - Total credit line

4. Email subject line that explains exactly what's in the message (important for scanning email messages), "Your balance exceeds the limit you set". Also, note how they ease your fears by saying it's over the limit "YOU SET," which is much less of a problem than if it was over the card limit

5. Brief explanation of factors that might be impacting the balance (such as car rental holds)

6. Concise pitch for Discover's mobile app, with text message option

7. Link to log in to adjust alert settings

8. Navigational links to: Statements | Payments | Rewards

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Discover Card email balance alert (4 May 2013)
Note: Yellow highlighting is ours

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Notes:
1. We previously blogged about Discover Card alerts here
2. For more info see our report, Email Banking: Revitalizing the Channel (published 2010, subscription).